A

Project Report
On
“Strategies of Online Marketing for Integrated Marketing
Communication - A Case Study of Xiaomi Corporation
Limited”

Submitted in partial fulfilment of the requirements for the

degree of
Master of Business Administration (MBA)
Session (2017-2019)

Under Supervision Of: Submitted By:

Mrs. Veenita Singh Virendra Vikram
Assistant Professor, Roll No. - 1710670118

SMS, Varanasi MBA 4rth Semester

SUBMITTED TO:

SCHOOL OF MANAGEMENT SCIENCES

VARANASI

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 DECLARATION

I hereby declare that the Research Project entitled " Strategies of Online Marketing
for Integrated Marketing Communication - A Case Study of Xiaomi Corporation
Limited" submitted for the Degree of Master of Business Administration is my
original work and the project has not formed for the award of any degree, diploma,
fellowship or similar other titles. It has not been submitted to any other University
or Institution for the award of any degree or diploma.

Name: Virendra Vikram

Place: Varanasi

Roll No: 1710670118

MBA FINAL

Date:

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 ACKNOWLEDGEMENT

I have a great pleasure and privilege in expressing my deep sense of gratitude to my

faculty guide Mrs. Veenita Singh for her supervision, constant encouragement, and
constructive criticism and valuable counsel through the study and preparation of
this project report guidance and useful suggestions, which helped me in completing
the project work, in time.

Once again, I thank all the persons who supported in number of ways whether they
are directly or indirectly concerned to my project report. My gratitud e and sincere
regards goes to my parents and friends for their encouragement, suggestions and
guidance from time to time.

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 TABLE OF CONTENTS

S. No Topic Page no.

ⅰ Authentication Certificate Ⅱ

ⅱ Declarations Ⅲ

ⅲ Acknowledgement Ⅳ

ⅳ List of Figures Ⅶ-Ⅷ

ⅴ List of Tables Ⅸ-Ⅹ

Content

1 Introduction 1 - 23

2 Objectives And Research Problems 24 - 25

3 Literature review 26 - 53

4 Research methodology 54 - 56

5 Case Study of Xiaomi Corporation 57 - 65

6 Data Analysis & Interpretation 66 - 73

7 Findings 74 - 76

8 Conclusion 77 - 78

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9 Limitations & Recommendations 79 - 80

10 Bibliography 81-82

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 LIST OF FIGURES

Figure No. About The Figure Page No.

Advantage to India in Indian

Figure 1.1 appliance and consumer 2
electronics Industry

Market Size, Sector

Composition And Key
Figure 1.2 6
Trends of Consumer
Durables

Major Competitors of
Figure 1.3 13
Xiaomi Smartphones

Top 20 Countries with

Figure 3.1 highest number of Internet 42
User in 2019

Global Smartphone Shipment

Figure 5.1 58
in Million Unit

Figure 6.1 Xiaomi market share in India 67

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 Devices used for collecting
Figure 6.2 68
news & information

Internet Users in India on the

Figure 6.3 69
basis of their age

Figure 6.4 Xiaomi market performance 70

Rely on one medium to

Figure 6.5 gather knowledge about any 72
brand

Sources of awareness of
Figure 6.6 73
various brands

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 LIST OF TABLES

Table No. About the Table Page No.

Balance Sheet of Xiaomi

Corporation according to the
Table 1.1 Wall Street Journal where 16-18
Fiscal year is from January to
December 2015-2018

Income Statement of Xiaomi

Corporation according to the
Table 1.2 Wall Street Journal where 19-22
Fiscal year is from January to
December 2015-2018

Table 6.1 Xiaomi market share in India 67

Devices used for collecting

Table 6.2 68
news & information

Internet Users in India on the

Table 6.3 69
basis of their age

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 Customer Satisfaction Rating
Table 6.4 in Indian Smart phone 71
Industry in 2018

Rely on one medium to

Table 6.5 gather knowledge about any 72
brand

Sources of awareness of
Table 6.6 73
various brands

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1. Introduction

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 Industry Detail
Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion (US$ 31.48
billion) in 2017. It is expected to increase at a 9 per cent CAGR to reach Rs 3.15 trillion (US$
48.37 billion) in 2022. Electronics hardware production in the country reached Rs 3.88
trillion (US$ 60.13 billion) in FY18, growing at a CAGR of 26.7 per cent between FY14-18.
Demand for electronics hardware in India is expected to reach US$ 400 billion by FY24.

There is a lot of scope for growth from rural markets with consumption expected to grow in
these areas as penetration of brands increases. Overall consumer durable exports reached US$
0.78 billion in 2017. Consumer electronics exports from India reached US$ 362.12 million in
FY18 and US$ 362.25 million between April 2018-January 2019. Also demand for durables
like refrigerators as well as consumer electronic goods are likely to witness growing demand
in the coming years in the rural markets as the government plans to invest significantly in
rural electrification. The S&P BSE Consumer Durables Index has grown at 16 per cent
CAGR between 2010-18. The consumer durables sector in India is expected to grow 8.5 per
cent in 2018-19. Consumer durables index under the Index of Industrial Production (IIP) has
grown 7.50 per cent year-on-year between Apr-Dec 2018.

White goods industry in India is highly concentrated. In washing machines and refrigerators,
top five players have more than 75 per cent market share, while in air conditioners and fans it
is around 55-60 per cent. On the other hand, kitchen appliances segment is fragmented with
top five players having 30-35 per cent market share.

Figure 1.1: - Advantage to India in Indian appliance and consumer electronics industry
(Source: - https://www.ibef.org/industry/consumer-durables-presentation)

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Growing awareness, easier access, and changing lifestyles have been the key growth drivers
for the consumer market. The Government of India‘s policies and regulatory frameworks
such as relaxation of license rules and approval of 51 per cent foreign direct investment (FDI)
in multi-brand and 100 per cent in single-brand retail are some of the major growth drivers
for the consumer market.

Growth in the India consumer electronics market can be attributed to increases in demand
from households, changing lifestyles of individuals, easier access to credit, and rising
disposable incomes. Intentional reduction by the Government in the import bill, coupled with
government and corporate spending is anticipated to complement the positive demand in this
market. The India consumer electronics sector has attracted several strong investments in the
form of merger & acquisition policies practiced by key participants of the global market and
other FDI inflows.

As per the Make in India initiative, Electronic Development Fund Policy has been approved,
with the intention of rationalizing a transposed duty structure. Another effort, such as the
Modified Special Incentive Package Scheme (M-SIPS) has been introduced to provide a
capex subsidy of nearly 15 – 20 percent. Consumer electronics manufacturers are set to
elevate investments in production, distribution, and R&D in the next few years. With rising
presence of organized retail, the market has experienced the emergence of modern, durable
retail chains, which include e-retailers such as E Zone, Reliance Digital, Tata Croma, etc.

High production in the Indian electronics market can be attributed to paced up demand for
advanced computers, mobile phones, TVs, and defence-related electronics. The situation in
this market mandates manufacturers to keep themselves updated with the latest technology,
since it is eye-catching to typical consumers, and technological features play an apex role
while selling to higher-income classes. The consumer electronics sector has witnessed the
highest share in the total production of electronic goods in India.

Under the Union Budget for the financial year 2017, the government exempted certain
components and parts, subparts for the production of set-top boxes for TV and internet and
broadband modems. The introduction of artificial intelligence (AI) is set to project a bright
future for the consumer, as well as industrial electronics in India.

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India is likely to emerge as a potential future manufacturing hub for the region, provided the
government shows adequate support and focus towards this sector. Specific factors
anticipated to push the manufacturing in India are inclusive of, reduction in borrowing costs,
export incentives, reduction of customs duties on raw materials and components, and
improvement in the ease of doing business.

Product Insights

The increasing per capita income, burgeoning middle class and increasing standard of living
in the country is catering to a rise in demand for television sets. Promotion and advertisement
activities carried out by leading industry participants such as Samsung has positively
augmented the market growth, and this trend is expected to continue over the forecast period.

Cable digitalization is also expected to cater to a rise in demand for televisions in India.
Platforms for special interests, local channels in regional languages, as well as capacity to
support a wide range of channels due to digitalization of cable network have spurred a rise in
demand for televisions. Also, the introduction of novel TV sets by key industry participants
such as Sony and Samsung are expected to contribute to an overall rise in demand for
televisions over the forecast period.

Rapid urbanization coupled with increasing disposable income in the country has contributed
to a rise in demand for refrigerators. Due to the versatile and advanced refrigerators available
in the market, the Indian consumers are replacing their existing and old refrigerators with
new ones. In addition to this scenario, refrigerator selling retailers are adopting competitive
strategies such as teaming up with financial institutes to provide easy financing options to sell
their products. Such trends are expected to favour market growth over the forecast period.

The Indian refrigeration industry is characterized by increasing supply, novel product

launches and regulatory support from the government. Companies adopt competitive pricing
techniques to gain market share. The increasing penetration of refrigerators in rural areas is a
key industry scenario.

Set-top boxes are used in connection with television sets. The set top box is used to translate
the signal received from satellites and to further convert it to television content. India
witnessed a rapid shift from analog signals to a set-top box in the recent past owing to the
superior benefits of the set-top box as well as government policies. This rapid change towards
set-top box is expected to continue over the forecast period.

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Set-top boxes offer inherent benefits such as better clarity of picture, ability to display a large
number of channels, digital video recording as well as video on demand. The government of
India issued regulations aimed at digitalization of the entire cable TV network in the country.
These inherent advantages coupled with the rising sales of television sets in the country have
benefitted the set-top box demand in the country.

India Consumer Electronics Market Share Insights

The landscape of original design manufactures (ODMs) or original equipment manufacturers

(OEMs) and local component suppliers in the Indian consumer electronics markets is not
mature yet, although emerging market participants of this industry have established a
substantial local manufacturing base and in-house box-building assemblies and execute their
manufacturing operations through a mix of local production and assembly.

India is presently serving as a strong foundation to contract manufacturers and OEM

companies. These companies employ various processes at their facilities, which include, end-
to-end contract manufacturing, in-house box assembly and PCB building assembly, sheet
metal assembly, and plastic injection molding. Majority of the OEMs and EMS usually
undertake last-mile assembly, and a very limited portion of designing (R&D/ODM) is
executed in the country.

The regional contract manufacturer and supplier base witnesses a limited scope with many
critical and high-value components being imported. Specific components which are locally
sourced include, packaging material, electrical components (plugs, wiring, etc.), a limited
number of compressors, low-end motors, metal stampings and castings, and injection
molding parts. Major industry participants include Videocon, Hitachi, Bharat Electronics,
Panasonic, Hewlett Packard, Toshiba, Dell, among others.

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The Consumer Electronic Market here consists of following product:-

 Mobile Phones
 Televisions
 Refrigerators
 Digital Cameras
 Air Conditioners
 Washing Machines
 Other Products

Figure 1.2: - Market Size, Sector Composition and Key Trends of Consumer
Durables
(Source: - https://www.ibef.org/industry/indian-consumer-market/infographic)

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 Company Profile

Xiaomi Corporation is a Chinese electronics company headquartered in Beijing. Xiaomi

makes and invests in smartphones, mobile apps, laptops, and related consumer electronics.

Xiaomi released its first smartphone in August 2011 and rapidly gained market share in
China to become the country's largest smartphone company in 2014. At the start of second
quarter of 2018, Xiaomi was the world's fourth-largest smartphone manufacturer, leading in
both the largest market, China, and the second-largest market, India. Xiaomi later developed
a wider range of consumer electronics, including a smart home (IoT) device ecosystem.

Xiaomi has 15,000 employees in China, India, Malaysia, Singapore and is expanding to other
countries including Indonesia, the Philippines, and South Africa. According to Forbes
magazine, Lei Jun, the founder and CEO, has an estimated net worth of US$12.5 billion. He
is China's 11th richest person and 118th in the world. Xiaomi is the world's 4th most valuable
technology start-up after receiving US$1.1 billion funding from investors, making Xiaomi's
valuation more than US$46 billion.

Xiaomi was founded in 2010. Xiaomi and MI are two different companies. However, they
produce MI and Redmi with collaboration with each other. Xiaomi's logo "MI" is short for
Mobile Internet since Xiaomi was founded to be a mobile-first technology company. Xiaomi
has a total of 15,222 full-time employees. Most are based in Beijing, Mainland China, while
the others are split between India, Taiwan, Indonesia, and Hong Kong.

Xiaomi produces many products. Notably, it produces smartphones which run on their own
version of Android MIUI firmware. Observers suggest that part of Xiaomi's rapid success
rests on its ability to differentiate itself within the Android universe. The company has
increased its range of products; its smartphones include: Mi Series, Mi Note Series, Mi Max
Series, Mi Mix Series and the Redmi Series. Redmi Note and MI mobile phones are two
different products of two different companies. As well as mobile phones, Xiaomi has started
selling wearable‘s, mobile accessories, and appliances such as television and speakers. In
2018 it was selling tablets, laptops, and smart-home devices.

Xiaomi operates on a vertically-integrated model that enables the company to sell hardware
at cost or below in order to attract users and earn money by selling content. Hugo Barra, a
former Google executive who served Xiaomi's vice president from 2014 to 2017,
characterized the organization as "an Internet and a software company much more than a
hardware company".

Xiaomi also keeps its prices low or close to "bill-of-material" by keeping most of its products
in the market longer, eighteen months rather than the six-month norm followed by many
smartphone companies. This strategy allows Xiaomi to take advantage of price reductions in
the prices of key components of its products. It enables the company to sell hardware with
specifications comparable to high-end devices at a fraction of the cost.

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The company's version of the Android operating system, the MIUI skin, with its design, app
marketplace, and functionalities, has established a community of users who form a crucial
part of Xiaomi's customer base and contribute to the company's drive for market awareness.
This ecosystem is a massive source of revenue as indicated in 2015, when sales from the
platform reached $750 million.

The company focuses on India, the world's second-largest smartphone market. Xiaomi
announced on May 2, 2018, the launch of Mi Music and Mi Video to offer "value-added
internet services" in India. On March 22, 2017, Xiaomi announced that it planned to set up a
second manufacturing unit in India in partnership with contract manufacturer Foxconn. On
August 7, 2018, Xiaomi announced on its blog that Holitech Technology Co. Ltd., Xiaomi's
top supplier, would invest up to $200 million over the next three years to set up a major new
plant in India.

Recently Xiaomi started to sell more simple goods such as sunglasses, caps, pillows, glass
lunchboxes, cups, filters, bags, backpacks, luggage, screwdrivers, umbrellas and etc.

History of Xiaomi
In December 2009, 40 year-old Lei Jun decided to become an entrepreneur again and
immediately began looking for partners. He found six, whose former positions had been vice
president at the Google China Research Institute, senior product manager at Google (China),
development commissioner at the Microsoft China Research Institute, design commissioner
at Kingsoft, dean of the Industrial Design Faculty at Beijing University of Technology, and
senior commissioner at the Motorola Beijing Research and Development Center. Among
them, some were Lei Jun‘s subordinates who responded immediately after just one call from
him, while others made him wait several days before a final decision despite Lei having spent
over 12 hours to try and persuade them. The first product these people developed was a
smartphone open platform based on Android. The result was the birth of the MIUI
smartphone operating system. Its development philosophy highlights the minimalist aesthetic:
refining the essence, focusing on content and achieving the ideal situation. Lei Jun formally
established Xiaomi in April 2010. Part of the company‘s name, ―xiao,‖ is a humble word
meaning small in Chinese. ―Mi‖ stands for mobile internet in English. Xiaomi‘s logo is also a
modification of MI.

The Xiaomi Smartphone

Lei Jun wanted to produce a smartphone, but almost no one in the industry was supportive,
given that Apple and Samsung occupied the world market due to their overwhelming
superiority and would not tolerate any challenge. However, Lei Jun said, ―Xiaomi is a
dreamer. Whether you think it is sick or not, I want just to do it.‖ Needless to say, no matter
how strong his willpower, the man would be a Don Quixote tilting at windmills if he was

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unable to do it. Apple plans and designs its smartphones, but manufacturing is outsourced to
Taiwanese manufacturers on an OEM basis. Xiaomi also tried to adopt the same business
model, but no manufacturer was interested in accepting orders from Xiaomi, because they
had never heard of the company. Smartphone production is very specialized, and having
accepted to take on production, a manufacturer would have to spend money to purchase the
necessary equipment. So, unless the order is large, it is difficult to recoup the expense.
Because Xiaomi was just starting to produce smartphones and was unable to offer a large
order like Apple, they either had to give up or accept paying much more for manufacturing.
Even so, Xiaomi placed an order, because it wanted to make smartphones as well as Apple.
Xiaomi procured parts the same way as Apple. For example, Apple purchased LCD panels
from Sharp, and so did Xiaomi. After the earthquake of March 11, 2011, many foreign
customers left Japan, but Lei Jun went there with his procurement staff and signed a supply
contract with Sharp. That contract was one reason why Sharp was able to improve its
performance, as mentioned earlier in this paper. But even though Xiaomi had been able to
find the same suppliers and plants to produce smartphones, due to lack of brand name, they
have little presence in sales. This was not the result that Xiaomi had expected. Lei Jun‘s goal
was to develop a product with the same quality as Apple at less than half the price, that is, a
high-quality, low-priced smartphone. At the same time as it was developing suppliers and
OEM manufacturers, Xiaomi developed ―MiChat,‖ an SNS tool for smartphones. Thus, the
developers can always open their ideas and asked users to assess whether the product was
good or not. Users understood the developers‘ intentions and responded with a variety of
comments and suggestions. As a result, Xiaomi already had 500,000 fans before the birth of
its smartphone. In addition, Lei Jun not only started a blog initially but also required each
employee to transmit information outside the company through social networks, and acquired
10 million members that way4). These members were called ―Mi Fans,‖ and they later
became the first users of the Xiaomi Smartphone. In September 2011, Xiaomi began selling
its M1 smartphone at 1,999 yuan (US$322) and sold 300,000 units within 34 hours. All was
surprised at the price, because Apple smartphones sold for more than 5,000 yuan (US$806),
which was expensive for most Chinese consumers. Could Xiaomi gain profit at this selling
price? The answer is no. Lei Jun knew this but still chose to compete on price. After some
research, the world discovered why he did this. First, because a new entrant has no brand
power, if the functions of the product are the same, price will be the only factor that will
attract customers. But it‘s not enough to be only 5 percent or 10 percent cheaper than the
competition, so Xiaomi simply priced its product at less than half the price of a comparable
Apple product. Many rebellious people will accept the price. Even if the product sells at a
loss at the beginning, if more units are sold the cost will drop, and once the breakeven point is
reached, the company can turn a profit. In other words, Xiaomi‘s breakeven point was high,
but it could achieve the same effect by accelerating the pace of sales. A second reason was
that Xiaomi derived profits from hardware as well as from software. Apple turned a high
profit because they kept the cost of the hardware as low as possible. By contrast, Xiaomi‘s
competitive strategy was to earn profits not only from hardware but also from software and
services. In order to achieve this competitive strategy, Xiaomi made operating system
upgrades available for free to users. Up to January 19, 2015, this service had continued for
220 weeks. Moreover, Xiaomi developed a new bracelet with a variety of functions such as
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pedometer, calorie counter, alarm clock, caller ID, and others. In May 2012, Xiaomi started
sales of the ―Xiaomi Youth Version‖ for college students: 150,000 units of this smartphone
sold out in just 10 minutes and 52 seconds, meaning that an average of 230 units were sold
per second. In October 2012, Xiaomi began selling M2, a new version of its smartphone. The
first batch of 50,000 units sold out in 2 minutes and 51 seconds. The second batch of 100,000
units, released for sale the next month, also sold out in 2 minutes and 29 seconds. In October
2013, Xiaomi launched its M3 phone. Although this model featured upgraded main
components, the price stayed at 1,999 yuan. For example, the CPU was NVIDIA‘s Tegra4,
the display panel was Sharp or LG‘s 5-inch 1080P, the camera was Sony‘s 1300-pixel
camera, and the battery was made by Samsung, LG or Sony. In otherwords, the M3 was the
most sophisticated smartphone in the world. Lei Jun once commented about the M3 that ―I
will always pursue the goal of making the fastest smartphone in the world. This is what I
have dreamed of since founding Xiaomi.‖

Compared to Apple smartphones, Xiaomi‘s smartphone is very moderate, but even so, many
young people in China are unable to afford even 1,999 yuan. Thus, Xiaomi began selling the
Redmi smartphone to China Mobile customers in July 2013. Redmi has the basic functions of
a smartphone, but the minimum price is 699 yuan (US$112). Thanks to Redmi, the
population of smartphone users has rapidly increased in China. Looking back, in only three
years and four months from the launch of M1 to the end of 2014, Xiaomi had sold a total of
87.41 million smartphone units, and sales is growing rapidly. Because Xiaomi is not yet
listed on the stock market, detailed financial data is not available, although some data for
sales can be extracted from media reports. According to those reports, we know that a sale of
500 million yuan to 74.3 billion yuan was a 148fold increase, and that a sale of smartphones
from 400,000 units to 61.12 million units was a 152-fold increase. In addition, IDC reported
that Xiaomi jumped into the top three in worldwide smartphone shipments for the first time
in the third quarter of 2014. Compared to the same quarter of the previous year, Samsung
shipments decreased by 8.2 percent, and Apple shipments were up by 16.1 percent. In
contrast to this, Xiaomi achieved an increase of 211.3 percent.

Financing for Xiaomi

In December 2010, the first time of funding, Xiaomi raised a total of US$41 million, and its
valuation was US$250 million. Three investment companies, Morningside, IDG and Qiming
Venture Partners, invested US$30 million. Morningside is a Hong Kong venture capital firm
mainly for high-tech ventures. IDG is a famous American company in IT research services
and is also involved in venture capital. Qiming is an investment company located in
Shanghai, and invests mainly in Chinese enterprises in their early stages and growth phases.
The remaining US$11 million was collected from Xiaomi‘s 56 employees, including the
management team. Everyone invested an average of US$200,000. In February 2011, Xiaomi
held a second round of funding, raising US$90 million. Its valuation was also evaluated at
US$1 billion. In addition to the previous three investors, Shunwei, Temasek and Qualcomm
joined as investors. Shunwei is an investment fund focusing on network-oriented venture; Lei

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Jun is its co-founder and chairman. Temasek is an investment company owned by the
Singapore government that has been ranked one of the best investment companies in the
world. Qualcomm is an American company that designs and develops communications
technology and semiconductors; it is also a CPU supplier for Xiaomi. Six months later,
Xiaomi started its third round of funding, raising US$216 million. The company‘s valuation
climbed to US$4 billion. Due to a confidentiality agreement, Xiaomi did not disclose the
name of the investors. In August 2013, Xiaomi canvassed for its largest funding until then.
Xiaomi asked one company to invest US$2 billion, and its valuation was evaluated at US$10
billion. The investor was DST (Digital Sky Technologies), a Russian investment company.
DST is not well-known, but it is a large shareholder of Facebook, an indicator of its strength.

In December 2014 Xiaomi raised US$1.1 billion from five investment companies: All-Stars,
DST, GIC, Houpu and Yunfeng. The company‘s valuation was estimated at a whopping
US$45 billion. This made Xiaomi the unlisted ICT enterprise with the highest valuation in
the world. All-Stars is an investment company established by five former employees
(including the director and general manager) of Morgan Stanley. The company invests
mainly in ventures related to the internet in China. GIC, an investment company owned by
the Singapore government, is also the largest international investment company in that
country. Houpu is an investment company launched by Fang Fenglei, who is a Goldman
Sachs partner in China and is supported by Goldman Sachs and Temasek. Yunfeng is an
investment company established by Jack Ma, founder of the Alibaba Group and the richest
man in China.

Problem Faced By Xiaomi

One is the barrier of patents. Although Xiaomi is very good at developing software, its lack
of smartphone design and manufacturing know-how is also very obvious. Therefore, to
produce and sell smartphones, Xiaomi had to sign license agreements with the companies
owning the related patents. Lei Jun published Xiaomi‘s cost list on June 26, 2012. According
to this list, the royalties for CPU technology paid by Xiaomi to Qualcomm are linked with
selling prices and percentages. Because the royalty payment was 110 yuan per product priced
at 1,999 yuan, we know that the percentage for royalties is 5.5 percent. However, a single
smartphone uses a multitude of technologies. Xiaomi does not have a clear map of other
companies patent protection in their phones. Therefore, they have carried the potential
lawsuit of patent infringement. For example, in June 2014, Xiaomi entered the Indian market,
but after it began to sell its Red Mi smartphone, Ericsson requested that Xiaomi immediately
stop infringing on its patents and pay royalties. After fruitless negotiations, Ericsson filed a
suit in India. On December 11, 2014, the Delhi High Court ruled that Xiaomi had infringed
on Ericsson‘s patents and ordered it to stop importing and selling its smartphone. Xiaomi
later resumed sales in India by introducing a smartphone that did not use technology patented
by Ericsson, but Xiaomi was severely affected by this ruling. Likewise Microsoft and Nokia
may also bring charges, relying on the results of Ericsson‘s action. If Xiaomi signed a license
agreement with Ericsson and every potential litigation opponent, would it be possible for

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Xiaomi to still keep selling its smartphone for 1,999 yuan? I believe that would probably be
impossible. If Xiaomi had to raise prices, it would gradually lose customers. In response to
losing in India, Xiaomi quickly disclosed patent application data for inventions. According to
this, we know that Xiaomi‘s patent applications have been increasing rapidly. Figure 3 shows
the details. These data show that Xiaomi is indeed making progress, but a total of 2,235
patent applications is not enough in order to compete with the giants in the industry. Thus if
Xiaomi is unable to overcome the barrier of patents, it may suffer a sudden setback. At
present, there is a real possibility. The other is the fact that Xiaomi is also challenged by
rivals. In the computer industry, modular parts mean that anyone can easily assemble a PC.
With the competition becoming more intense, restructuring has taken place in the industry.
For example, Dell once occupied the first place in global share, but in now, their production
is disappeared. HP was also once at the top but lost its place and was overtaken by Lenovo.
It‘s the same in the mobile phone industry. Nokia was once the world leader, but it was too
slow to develop smartphones. Consumers abandoned it, and it was sold to Microsoft. In other
words, life cycles in the ICT-related business are short and the risks are big. No one can
forecast even when, where or which competitor will appear or if a company will get stuck in
a price competition or be overwhelmed by a new competitor with an innovative business
model. There is always a risk. In China, known as the world‘s factory, the potential of such a
competitor emerging is greater than in other countries. In fact, there are several enterprises in
China that consider Xiaomi a rival. Therefore if Xiaomi fail to build a new business model
protecting imitation, they are attacked by rivals.

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Major Competitors
There are roughly 1000 companies which make smartphones worldwide but the interesting
fact is that Apple and Samsung account for more than 100 percent of industry profits as all
other makers broke even or lost money as per Canaccord‘s Calculation. A very shocking
thing which has happened in smartphone industry is that for the very first time Sony and
Microsoft has lost their positions under top 10. Some of the major competitors are as follows:

Apple

Samsung
Others
Electronics

Major Competitors

Huawaei Lenovo

Figure 1.3 –Major Competitors of Xiaomi Smartphones

 Apple: Apple sells less than 20% of the smartphones but takes in 92 percent of the
global smartphone profits. This thing reflects one only thing about the company and
that is the ability with which Apple is able to continuously charge a premium price on
its smartphones. As per the words of Denny Strigl, former Chief Operating Officer of
Verizon communication Inc., This dominance of Apple is very hard to overcome. The
company shipped a total of 47.5 million units with a decline of 22.3% from Q1 of
2015.Overall IPhones saw a growth of 35% year over year and a remarkable 51.4% in
emerging markets. This data again shows how important developing markets are for
companies like China, India, and Brazil. Whether its storing photos in Apple‘s cloud
or purchasing apps through Apple store or whether it‘s ITunes, Apple products are
highly integrated. Researcher use a term known as ―Apple ecosystem Lock‖ to define

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 its business model. This is because you ask any IPhone user, once you get used to
Apples lifestyle it‘s almost impossible for consumers to move away from it. Due to
such commanding position in the global market place the company was valued at over
$700billion.
The company has revisited its strategy in many markets particularly in India which
earlier used to be a dumping ground now has become one of the most important
markets for the company as the company recorded a growth of around 93 percent
from a period of April to June 2015 and thus overtaking not only China but many
countries like Italy, Netherlands, Spain And Turkey for the very first time in the
company‘s history. As a result sales of I Phones clocked $1 billion dollars in India

 Samsung Electronics: Even though Samsung couldn‘t keep it up with the Apple‘s
pace but Samsung sold 76 million smartphones up from 72 during the same quarter of
2014. Samsung Electronics accounts for more than 70 percent of the revenue. The
company still has a huge dominance in the worldwide smartphone market and still has
the highest shares of 21.9 percent. Samsung was able to retain the flagship position
due to the surge in the shipments of lower end models in regions like Middle East,
South East Asia and Africa. Despite this surge company has lost its dominance in the
region from controlling 53 percent market share in second quarter of 2013 to 32
percent in the same quarter of 2015.Sales from the second quarter of 2015 have
dropped to 8 percent from a year earlier primarily due to less sales of S6 as per the
estimates. Samsung‘s net income for three months up to June 30 was 5.75 trillion
Won while in the last year in the same timeframe it was 6.25 trillion won. Further the
operating profit margin also declined to 10.6 percent in the second quarter of 2015
from 15.5 percent in the same quarter of last year.

 Lenovo: Due to its strong dominance in Chinese markets, Lenovo has come from
nowhere and established itself as the third biggest manufacturer of the smartphones
throughout the world. Last year in February 2014, Lenovo claimed that its sales of
smartphones in India have been increasing 100% per quarter while the market is only
growing 15-20% over the same period. The company currently controls around 5
percent of the Global market share in smartphone industry. Further with the
acquisition of Motorola an iconic brand at a valuation of around US $2.91 billion
Lenovo has made its presence felt not only in China but throughout the globe.

 Huawei: Huawei is a Chinese multinational company based in Shenzen, Guangdong.

Huawei has come a long way from providing telecommunication equipment‘s to
almost all of the global giants to being one of the top five smartphone manufacturers
in the world. The company currently controls 5 percent of the global market share in
smartphone industry. Huawei shipped a record number of 30.6 million mobile phones
in Q2 2015. Huawei is escalating fast in all countries of the world, especially in China
where its 4G models, such as the Mate7, are showing wide popularity. Huawei has
finally surpassed Microsoft to grow into the world‘s third largest mobile phone

Page | 14
 vendor for the first time ever. As per the data from IDC Huawei‘s smartphone rose
almost 48 percent in 2015 from a year earlier giving it a share of around 8.9 percent
and making it the fastest growing competitor among the top five smartphone
companies. The company has already overtaken Samsung in China with smartphones
having higher resolution, better battery life and less prices as compared to Samsung.
If we take the Middle East into consideration the company has almost quadrupled its
market share from a small 2.6 percent in the second quarter of 2013 to 11 percent in
the same quarter of 2015. The total shipments at the same time in Middle East and
Africa combined jumped 60 percent as per the data from IDC.

 Others: LG is a South Korean multinational company headquartered in Soul and a

member of LG group one of the biggest conglomerates in South Korea. The company
currently controls around 4 percent of the global market share. Then there are
companies like ZTE controlling around 3percent of the market share along with
Coolpad controlling around the same market share by the ist quarter of 2015. This
data is being witness to the fact that how Chinese companies have overtaken almost
all the top eight spots in the global smartphone industry replacing the likes of Sony
and Microsoft.

Page | 15
Table 1.1: - Balance Sheet of Xiaomi Corp according to the Wall Street
Journal where Fiscal year is from January to December 2015-2018

Years
Assets
(All values HKD Millions)
2018 2017 2016 2015

Cash & Short Term Investments 45,301 23,754 15,420 13,868

Cash Only 36,161 17,136 11,005 10,098

Short-Term Investments 9,139 6,618 4,415 3,769
Cash & Short Term Investments
90.71% 54.04% 11.19% 0.00%
Growth
Cash & ST Investments / Total
27.32% 21.95% 27.18% 29.46%
Assets
Total Accounts Receivable 39,921 21,891 6,138 4,401
Accounts Receivables, Net 6,384 6,566 2,331 1,755
Accounts Receivables, Gross 7,263 6,963 2,393 1,792

Bad Debt/Doubtful Accounts -879 -397 -62 -38

Other Receivables 33,537 15,325 3,807 2,646

Accounts Receivable Growth 82.37% 256.65% 39.47% 0.00%
Accounts Receivable Turnover 5.19 6.04 13.03 18.73
Inventories 34,801 26,899 12,257 11,183
Finished Goods 21,795 10,158 3,711 6,711
Work in Progress 2,359 1,624 1,103 2,072
Raw Materials 8,374 8,027 4,312 2,177
Progress Payments & Other 2,273 7,090 3,131 224
Other Current Assets 1,583 1,450 807 974
Prepaid Expenses 260 235 204 172
Miscellaneous Current Assets 1,323 1,215 603 802
Total Current Assets 121,606 73,994 34,622 30,426
Net Property, Plant & Equipment 5,779 2,078 946 346
Property, Plant & Equipment -
6,596 2,691 1,332 635
Gross
Machinery & Equipment 733 507 416 416
Construction in Progress 5,181 1,769 717 71
Other Property, Plant &
682 415 199 149
Equipment
Accumulated Depreciation 816 613 386 289
Machinery & Equipment 433 357 237 193

Page | 16
 Other Property, Plant &
383 256 149 96
Equipment
Total Investments and Advances 31,104 24,690 15,844 12,078
LT Investment - Affiliate
9,852 2,054 2,067 2,064
Companies
Other Long-Term Investments 21,252 22,637 13,777 10,014
Intangible Assets 2,350 2,730 1,250 661
Net Goodwill 322 298 277 296
Net Other Intangibles 2,029 2,432 973 365
Other Assets 3,989 4,282 3,919 3,373
Deferred Charges 3,881 4,101 3,898 3,104
Tangible Other Assets 109 181 21 269
Total Assets 165,826 108,195 56,729 47,078
Assets - Total - Growth 53.26% 90.72% 20.50% 0.00%
Asset Turnover 1.51 - - -
Return On Average Assets 11.72% - - -

Years
Liabilities & Shareholders'
Equity
(All values HKD Millions.) 2018 2017 2016 2015

ST Debt & Current Portion LT

3,507 4,324 4,261 37
Debt
Short Term Debt - 937 391 37
Current Portion of Long Term
3,507 3,387 3,870 -
Debt
Accounts Payable 52,784 40,819 19,610 16,978
Accounts Payable Growth 29.31% 108.15% 15.50% 0.00%
Income Tax Payable 1,747 506 288 122
Other Current Liabilities 13,588 10,931 4,918 2,514
Accrued Payroll 1,538 1,398 908 771
Miscellaneous Current Liabilities 12,050 9,533 4,011 1,743
Total Current Liabilities 71,626 56,581 29,078 19,651
Current Ratio 1.7 1.31 1.19 1.55
Quick Ratio 1.21 0.83 0.77 0.98
Cash Ratio 0.63 0.42 0.53 0.71
Long-Term Debt 12,179 202,518 129,629 130,307
Long-Term Debt excl.
12,179 202,518 129,629 130,307
Capitalized Leases
Non-Convertible Debt 12,179 202,518 129,629 130,307

Page | 17
 Provision for Risks & Charges 637 230 114 14
Deferred Taxes -888 1,112 456 297
Deferred Taxes - Credit 108 1,534 604 491
Deferred Taxes - Debit 997 421 148 194
Other Liabilities 24 42 9 18
Other Liabilities (excl. Deferred
24 42 9 18
Income)
Total Liabilities 84,575 260,905 159,433 150,482
Total Liabilities / Total Assets 51.00% 241.14% 281.04% 319.64%

Common Equity (Total) 81,334 -152,784 -102,853 -103,494

Common Stock Par/Carry Value 0 0 0 0

Additional Paid-In
50,006 892 829 880
Capital/Capital Surplus

Retained Earnings 23,975 -154,813 -94,618 -101,625

Cumulative Translation
Adjustment/Unrealized For. 50 -4,538 -13,060 -5,810
Exch. Gain
Other Appropriated Reserves 7,002 5,588 3,890 2,983
Unappropriated Reserves 301 87 106 77
- - -
Common Equity / Total Assets 49.05%
141.21% 181.30% 219.83%

Total Shareholders' Equity 81,334 -152,784 -102,853 -103,494

Total Shareholders' Equity / Total - - -

49.05%
Assets 141.21% 181.30% 219.83%

Accumulated Minority Interest -83 74 149 91

Total Equity 81,251 -152,709 -102,704 -103,403

Total Liabilities &

165,826 108,195 56,729 47,078
Shareholders' Equity

Note: - The green colour represents the positive changes in the various ratios and red colour
represents the negative changes in the various ratios.

Interpretation – From 2015 to 2018 we are seeing a constant growth in assets and shareholder
equity. It denotes a positive trend in which company is growing.

Page | 18
Table 1.2: - Income Statement of Xiaomi Corporation according to the
Wall Street Journal where Fiscal year is from January to December 2015-
2018
Particulars Years
(All values
HKD Millions) 2018 2017 2016 2015

Sales/Revenue 207,179 132,172 79,960 82,410

Sales Growth 56.75% 65.30% -2.97% 0.00%

Cost of Goods
Sold (COGS) 181,780 115,114 71,770 79,335
incl. D&A

COGS
180,894 114,698 71,489 79,080
excluding D&A

Depreciation &
Amortization 886 416 280 255
Expense

Depreciation 260 192 164 175

Amortization of
626 224 117 79
Intangibles

COGS Growth 57.91% 60.39% -9.54% 0.00%

Gross Income 25,399 17,058 8,190 3,076

Gross Income
48.90% 108.28% 166.28% 0.00%
Growth

Gross Profit
12.26% - - -
Margin

SG&A Expense 29,754 10,652 6,792 4,915

Research &
6,238 3,477 2,328 1,765
Development

Other SG&A 23,516 7,176 4,464 3,150

Page | 19
 SGA Growth 179.32% 56.83% 38.21% 0.00%

Other Operating
-98 -4 -142 -47
Expense

EBIT -4,258 6,410 1,540 -1,792

Unusual
-20,220 55,003 359 7,854
Expense

Non Operating
584 345 347 165
Income/Expense

Non-Operating
1,133 530 227 531
Interest Income

Interest Expense 456 249 205 152

Interest Expense
83.17% 21.33% 34.54% 0.00%
Growth

Gross Interest
542 298 220 154
Expense

Interest
87 49 15 1
Capitalized

Pretax Income 17,224 -47,966 1,549 -9,103

Pretax Income
135.91% -3196.04% 117.02% 0.00%
Growth

Pretax Margin 8.31% - - -

Income Tax 532 2,375 799 191

Income Tax -
Current 1,676 - - -
Domestic

Income Tax - -1,143 - - -

Page | 20
 Deferred
Domestic

Equity in
-728 -267 -176 -114
Affiliates

Consolidated
15,964 -50,608 574 -9,408
Net Income

Minority Interest
-90 -73 -72 -56
Expense

Net Income 16,054 -50,535 646 -9,351

Net Income
131.77% -7917.61% 106.91% 0.00%
Growth

Net Margin 7.75% - - -

Net Income
After Extra 16,054 -50,535 646 -9,351
ordinaries

Net Income
Available to 16,054 -50,535 646 -9,351
Common

EPS (Basic) 1 -2.23 0.03 -0.41

EPS (Basic)
144.88% -7910.18% 106.92% 0.00%
Growth

Basic Shares
16,070 22,703 22,703 22,703
Outstanding

EPS (Diluted) 0.05 -2.23 0.03 -0.41

EPS (Diluted)
102.35% -7917.61% 106.91% 0.00%
Growth

Page | 21
 Diluted Shares
23,563 22,703 22,703 22,703
Outstanding

EBITDA -3,371 6,826 1,820 -1,537

EBITDA
-149.39% 274.99% 218.40% 0.00%
Growth

EBITDA
-1.63% - - -
Margin

EBIT -4,258 6,410 1,540 -1,792

Interpretation – From 2015 to 2018 we are seeing a growth in earnings per share. It denotes
that shareholders are benefitted from investing in the company and thus we can say company
is growing and with it shareholder and all the related parties with the company are growing.

Page | 22
About the Project

Marketing is an important part of any organisation to survive in market and

an organisation uses various tool and technique to distinguish its product
from its competitor. One such tool used by marketers today is Online
Marketing. The marketers are already declaring it as a revolution which has
changed the definition of Market and Customer.

Online Market is expanding on dail y basis but still tradi tional methods are
not yet out of the market.

The main purpose of this project is to study the relationship between

Integrated Marketing Communication and Online Marketing by taking into
consideration a industry, which is expanding both online and offline.

The project also studies the new technique of marketing developing online
and how company such as Xiaomi is using this online market to generate its
revenue.

Market is changing constantl y and online market has boosted that ch ange by
making the market more competitive and customer friendl y.

The project deals with following topics: -

 Understanding Integrated Marketing Communication

 What is Online Marketing?
 Why Online Marketing?
 Why Online Marketing is necessary?
 What are benefit of Online Marketing over Traditional Marketing
 Should any organisation choose online marketing?
 What is the role of Online Marketing in Integrated Marketing
Communication

At the end of the project we should be able to interpret whether online

marketing strategies should be applied in congruence with integrated
marketing communication or not.

Page | 23
2. Objectives and Research Problems

Page | 24
Objectives

 To study and analyse the marketing strategy of Xiaomi Corporation Limited.

 To identify the impact of online marketing strategy of Xiaomi Corporation Limited.

 To study the growth of Xiaomi Corporation Limited due to modern technique of

Integrated Marketing Communication.

 To identify and analyse the limitations of online marketing in Xiaomi Corporation

Limited.

Research Problems

This study focuses on following problems –

 Should Xiaomi integrate various marketing tools to communicate about its brand?

 How do consumers get awareness about different brands?

 How online marketing plays important role in companies‘ marketing strategy?

 What are the reasons for growing popularity of online marketing among

consumers?

Page | 25
3. Literature Review

Page | 26
Integrated Marketing Communication (IMC)

Integrated marketing communication refers to integrating all the methods of brand promotion

to promote a particular product or service among target customers. In integrated marketing

communication, all aspects of marketing communication work together for increased sales

and maximum cost effectiveness.

Various components of Integrated Marketing Communication are:

 The Foundation - As the name suggests, foundation stage involves detailed analysis of

both the product as well as target market. It is essential for marketers to understand

the brand, its offerings and end-users. You need to know the needs, attitudes and

expectations of the target customers. Keep a close watch on competitor‘s activities.

 The Corporate Culture - The features of products and services ought to be in line with

the work culture of the organization. Every organization has a vision and it‘s

important for the marketers to keep in mind the same before designing products and

services. Let us understand it with the help of an example. Organization A‗s vision is

to promote green and clean world. Naturally its products need to be eco friendly and

biodegradable, in lines with the vision of the organization.

 Brand Focus - Brand Focus represents the corporate identity of the brand.

 Consumer Experience - Marketers need to focus on consumer experience which refers

to what the customers feel about the product. A consumer is likely to pick up a

product which has good packaging and looks attractive. Products need to meet and

exceed customer expectations.

 Communication Tools - Communication tools include various modes of promoting a

particular brand such as advertising, direct selling, promoting through social media

such as facebook, twitter, orkut and so on.

Page | 27
  Promotional Tools - Brands are promoted through various promotional tools such as

trade promotions, personal selling and so on. Organizations need to strengthen their

relationship with customers and external clients.

 Integration Tools - Organizations need to keep a regular track on customer feedbacks

and reviews. You need to have specific software like customer relationship

management (CRM) which helps in measuring the effectiveness of various integrated

marketing communications tools.

Integrated marketing communication enables all aspects of marketing mix to work together in

harmony to promote a particular product or service effectively among end-users.

Integrated marketing communication (IMC) is an approach used by organizations to brand

and coordinate their communication efforts. The American Association of Advertising

Agencies defines Integrated Marketing Communication as "a concept that recognizes the

added value of a comprehensive plan that evaluates the strategic roles of a variety of

communication disciplines, and combines these disciplines to provide clarity, consistency and

maximum communication impact." The primary idea behind an IMC strategy is to create a

seamless experience for consumers across different aspects of the marketing mix. The brand's

core image and messaging are reinforced as each marketing communication channel works

together in unity, rather than in isolation.

According to William Stanton, ―IMC is an element in organisation‘s marketing mix that is

used to inform, persuade and remind the market regarding the organisation and / or its

products.‖

Koekemoer & Bird, (2004) defines Integrated Marketing Communication as the collective

activities, materials and media used by a marketer to inform or remind prospective customers

about a particular product offering and to attempt to persuade them to purchase or use it.

Page | 28
IMC blends various promotional tools and communication/marketing/advertising services

and techniques to maximize profit. IMC is ultimately achieved through concise and

consistent messaging that fosters familiarity and consumer affinity. Effective IMC messages

and images are meaningful and useful to consumers, messaging and branding consistency - a

proven IMC concept - yield customer satisfaction and loyalty.

History of Integrated Marketing Communication

First defined by the American Association of Advertising Agencies in 1989, IMC was

developed mainly to address the need for businesses to offer clients more than just standard

advertising. The 4As originally coined the term the "new advertising‖, however this title did

not appropriately incorporate many other aspects included in the term "IMC" - most notably,

those beyond traditional advertising process aside from simply advertising.

Overall, an influx of new marketplace trends in the late 20th century spurred organizations to

shift from the standard advertising approach to the IMC approach:

 Decreasing message impact and credibility: The growing number of commercial

messaging made it increasingly more difficult for a single message to have a

noteworthy effect

 Decreasing costs of databases: The cost of storing and retrieving names, addresses

and information from databases significantly declined. This decline allowed marketers

to reach consumers more effectively.

 Increasing client expertise: Clients of marketing and public relations firms became

more educated regarding advertising policies, procedures and tactics. Clients began to

realize that television advertising was not the only way to reach consumers.

Page | 29
  Increasing mergers and acquisitions of agencies: Many top public relations firms and

advertising agencies became partners or partnered with other communication firms.

These mergers allowed for more creativity, and the expansion of communication from

only advertising, to other disciplines such as event planning and promotion.

 Increasing global marketing: There was a rapid influx in advertising competition from

foreign countries. Companies quickly realized that even if they did not conduct

business outside their own country, they were now competing in global marketing.

 Increasing media and audience fragmentation: With the exception of the decline of

newspapers, media outlets, such as magazines and television stations, increased from

1980 to 1990. Additionally, companies could us new technologies and computers to

target specialized audiences based on factors such as ethnic background or place of

residence.

 Increasing number of overall products: Manufacturers flooded retailers with a

plethora of new products, many of which were identical to products that already

existed. Therefore, a unique marketing and branding approach was crucial to attract

customer attention and increase sales.

The Shift from Fragmented to Integrated Marketing Communication

Prior to the emergence of integrated marketing communication during the 1990s, mass

communication – the practice of relaying information to large segments of the population

through television, radio, and other media dominated marketing strategy. Marketing was once

used as a one-way feed. Advertisers broadcasted their offerings and value proposition with

little regard for the diverse needs, tastes, and values of consumers.

Page | 30
Often, this "one size fits all" approach was costly and ineffective due to its general inability to

measure results in terms of sales. As methods for collecting and analyzing consumer data

through single-source technology such as store scanners improved, marketers were able to

correlate promotional activities with consumer purchasing patterns. Companies also began

downsizing their operations and expanding marketing tasks within their organizations.

Advertising agencies were also expected to understand and provide all marketing functions –

not just advertising – for their clients.

Today, corporate marketing budgets are allocated towards trade promotions, consumer

promotions, branding, public relations, and advertising. The allocation of communication

budgets away from mass media and traditional advertising has raised IMC's importance for

effective marketing. Now, marketing is viewed more as a two-way conversation between

marketers and consumers. This transition in the advertising and media industries can be

summarized by the following market trends:

 A shift from mass media advertising to multiple forms of communication.

 The growing popularity of more specialized (niche) media, which considers

individualized patterns of consumption and increased segmentation of consumer

tastes and preferences.

 The move from a manufacturer-dominated market to a retailer-dominated, consumer-

controlled market.

 The growing use of data-based marketing versus general-focus advertising and

marketing.

 Greater business accountability, particularly in advertising.

 Performance-based compensation within organizations, which helps increase sales

and benefits in companies.

Page | 31
  Unlimited Internet access and greater availability of online goods and services.

 A larger focus on developing marketing communication activities that produce value

for target audiences, while raising benefits and reducing costs.

Integrated Marketing Communication and its comparison with Simple

Marketing Communication

As per Don Schultz (2008), IMC is a strategic business process used to plan, develop,

execute and evaluate coordinated, measurable, persuasive brand communication programmes

over time with consumers, customers, prospects, and other targeted, relevant external and

internal audiences. The key difference in this definition of IMC from that of simple

Marketing Communication is highlighted by use of three words: i) strategic, ii) evaluate and

iii) measurable. In essence, IMC enforces use of marketing communication mix in such a way

that it is strategically designed to achieve certain objectives, measured to enforce

accountability over marketers and are evaluated over time. These elements are also stressed

on by various IMC authors (Schultz, 1996; Duncan & Caywood, 1996), who believe that

although the concept of IMC is not new, but the fact that previously marketing

communication was not coordinated strategically and strategy is now believed critical, gives

this concept a new look.

In another definition of IMC given by a well-known author on IMC literature, Kliatchko

(2005) reflects the same concept. As per the author, IMC is the concept and process of

strategically managing audience-focused, channel-centered and results driven brand

communication programmes over time. This definition is a bit more specific and along with

strategy and accountability it emphasizes specifically on communication being channel-

centered and audience-focused. Managing and coordinating the integration of company`s

communication across different media and channels is an important aspect of IMC. IMC does

Page | 32
involve a process/plan aimed at providing consistency and impact through integration of

communication via different mediums (Larich & Lynagh, 2009).

Moreover, Kitchen and Schultz (1997) believe that integrated marketing communication has

significant value for the organization, specifically in lowering costs and having greater

control over the marketing communication program. This is supported by Duncan and Everett

(1993) who extend the benefits to include gaining competitive advantage through IMC.

The common point, however, in almost every definition of IMC is the fact that it enforces

accountability over marketers and hence more and more marketers feel the need of using

mediums that offer better measures of performance. It can be generalized that the idea of

IMC used in above theories/definitions revolve around a 360 degree marketing

communication programs for any of the brand that is strategically designed to achieve desired

objectives.

Hence, it would be fair to say that IMC includes all kind of communication programs that

targeted for the same objective, regardless of the medium used, be it TV, Print, Radio, Street

Marketing, Social Media Marketing, Internet Marketing, PR, Green Marketing, or any other

thing.

Page | 33
Integrated Marketing Communication – The Changing trend

Media has undergone an extensive phase of development in the last ten years. Marketers were

previously focusing on promoting their product/service through traditional mediums like TV,

Radio, Newspapers, however, now the future of marketers appears to be digital as technology

has become an important part of daily lives (Pall & McGrath, 2009).

Concepts like convergence have come in to bring more versatility in the communication

mediums being used. Convergence represents a paradigm shift – a move from medium

specific content towards content that flows across multiple media channels, towards the

increased interdependence of communication systems, towards multiple ways of accessing

media content, and towards ever more complex relations between top-down corporate media

and bottom-up participatory culture.‗ (Jenkins, 2006)

The concept certainly suggests about making the communication mix ― interdependent

bringing in more integration and moving towards having multiple ways of accessing media

i.e. bringing in more versatility in the marketing mix by using a mix of traditional and new

media. Moreover, it refers to the behaviour of media audience as being migratory, i.e. shifting

to the media that can provide them their desired experience. In such an environment,

customers are actively involved in seeking new information and make connections among

dispersed media content.

Page | 34
Benefits of Integrated Marketing Communication

IMC helps to create Top of Mind (TOM) awareness with the aid of various marketing tools.

 IMC not only creates awareness, but, evokes the purchase action. IMC persuades the

customers to buy the product or service through creative messages, free gifts, trial

offers etc.

 IMC helps to develop brand loyalty that results in repeat purchase and favourable

recommendations to others by existing customers.

 By using various techniques of promotion, IMC may help expanding the market from

local to regional, regional to national, national to international.

 Different marketing tools may be aggressively used to block the competitor‘s

marketing efforts.

 All the above benefits of IMC lead to develop the brand image as well as the

corporate image in the mind of customers.

Limitations of Integrated Marketing Communication

 Lack of coordination within various departments within the large agencies over areas

such as sales promotion, advertising, public relation. This may also lead to internal

conflict.

 It limits client‘s ability to take advantage of specialists in various IMC areas.

 Synergy and economies of scale are not achieved by a single agency handling all

communication areas.

Page | 35
Future of Integrated Marketing Communication

The conception of integrated marketing communication (IMC) is fairly new. The IMC

tools allows marketing manager to plan and then execute his marketing

communication programs, which create and maintain mutually beneficial, long-term

relationships with the target market by satisfying their needs and wants. This means

that promotion tools are used to create loyalty.

The future trends of IMC are discussed in the following:

 Competitive Advantage: The Various tools that organization has can be used

as a competitive edge against the competitors. Competitive advantage is the

edge and the ability of firm to provide superior value to its target market as

compared to competitors. As IMC components are designed as a whole, the

organization is able to focus its efforts in all the communication elements that

create single, powerful brand equity by speaking with one voice. This single

brand message provides a competitive advantage to the company as the target

clearly understand that what the company is communicating.

 Brand Equity: IMC strategies are essential to the company's strategic brand

management because IMC strengthens the interface between the

organization's strategy of brand identity and the target market's brand equity.

The organization that uses IMC strategies will be able to measure the brand

awareness and brand image of its various offerings. Specifically IMC

strategies and brand identity are the most vital parts of the company's overall

brand equity strategy. The brand identity strategy of the organization serves as

a foundation for its overall IMC initiative and, for this reason, accounts for to

the firm's brand equity.

Page | 36
 Online Advertising: Online Advertising is becoming powerful IMC tool for

advertisers and organization can use online advertisement as people are now

spending more time online; the Internet became another channel via which

companies can market their offerings successfully. (Google 2007) Because of

the Internet's versatility, it will give an organization the opportunity to reach

and interact with its target market. Companies can now produce an IMC

campaigns that exclusively target the desired customer more successfully with

less cost as compared to traditional communication efforts. Online campaigns

will give organization new abilities to the organization due to the following

reasons:

o Reach: The Internet used by more than 170 million people only in the

United States.

o Relevance: Online Advertising shows ads to potential customers who

are actively searching for what businesses have to offer.

o Return on investment (ROI): Using analytical tools, companies can

understand more about the effectiveness and efficiency of their ads.

(Google 2007)

 Viral marketing: Viral marketing is an IMC technique that is mostly used for

trendy brands; Marketers are increasing acknowledging viral marketing as an

important IMC tool because it offers the traditions benefits and effectiveness

of advertising. In viral marketing the organization promotes its product using

Word of Mouth Marketing (WOMM), utilizing individual's communication

networks, and relying on their individual recommendations to sell the

product. Companies actively seek viral marketing, by fueling discussion on

their offerings. (Groucutt, J. et al 2004).

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 Multi-Channel Promotion: As multichannel media increases in reputation,

the problem of IMC is to make sure that the IMC campaign reaches its

planned audience. According Perkin (2003) ―as media-blitzed, ad-cynical,

time-poor, channel-flicking audience living in a fast-paced, attention-

challenged world‖ The fact is that due to fast pace of technology, and

globalization of the world, consumer behaviour around the world is changing.

Today customer have more control over what to see, and read and therefore

IMC need to tailor the organization campaign as per the requirements of the

market.

 Media Selection: There are a huge number of magazines, each having its own

focus, allowing segmented audience to the organization. The owner of these

Magazines not only offers media planners a place to get the target audience,

but also provide insights regarding audience and how to connect with them in

the most excellent manner. Companies can use these magazines in there IMC

efforts by effectively marketing their product and to utilize and ensure correct

targeting, positioning and promoting the company offerings. (Perkin, N.

2003).

 Sponsorship Campaign: Sponsorship of sporting events like football, cricket,

or even horse race is recognized as a strong medium of promotion due to its

focus of providing target audience on one platform event and the capability to

attach with company target market by adding value to their behaviour and

interests.

The finding of the response that how a particular customer or a group of

customers will reveal some interesting aspects about the company sponsorship

and will also reveal the form of sponsorship appropriate for the company

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 products. Although sponsorship, like other form of promotional mix, has to

prove its value in IMC, consumers are inner to a sponsorship strategy.

Targeting the accurate event will take a lot of research on behalf of the

organization while the exposure created by sponsorship is very short lived

(Crow 2003).

 Market Positioning: The art of targeting customer to portray a product in a

certain desired manner in known as positioning is the one of the most

important factor while launching a new product and/or service for any

organization. With the entire media overloaded, the consumer has closed mind

to the new products, therefore, the company offerings should be exceptional,

and supported by original, relevant, creative and really inspired IMC efforts.

Advertising diffusion is exceptional and media fragmentation is growing now

a days. In order to get a desired level of recall and brand awareness marketer

need to target several medium. This is due to fact that consumer media habits

are diverse and had led to higher IMC budgets and also waste of the precious

organizational resources.

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Online Marketing

Online Marketing is the art and science of selling products and/or services over digital

networks, such as the Internet and cellular phone networks.

The art of online marketing involves finding the right online marketing mix of strategies that

appeals to your target market and will actually translate into sales.

The science of online marketing is the research and analysis that goes into both choosing the

online marketing strategies to use and measuring the success of those online marketing

strategies.

Online marketing uses internet to deliver promotional marketing messages to consumers. It

includes email marketing, search engine marketing, social media marketing, many types of

display advertising (including web banner advertising), and mobile advertising. Like other

advertising media, online advertising frequently involves both a publisher, who integrates

advertisements into its online content, and an advertiser, who provides the advertisements to

be displayed on the publisher's content. Other potential participants include advertising

agencies that help generate and place the ad copy, an ad server who technologically delivers

the ad and tracks statistics, and advertising affiliates who do independent promotional work

for the advertiser.

Since the early 2000s, online social media has made rapid growth in shaping the Internet.
Today, hundreds of millions if not billions of people spending their time on social media
portals such as Facebook, Twitter, LinkedIn, Google Plus, and YouTube. How an
Ecommerce website can use social media Businesses that understand how to engage their
customers with social media are more likely to generate traffic and revenue compared with
businesses who do not. In the beginning of the web revolution, Internet forums and e-mail
marketing were ideal ways to reach out to a targeted, set customer base. Now though,
businesses are finding that social media makes it easier than ever to target prospective

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customers, re-target existing customers, and let people know about special promotions. For
example, an Ecommerce website that engages in a Facebook marketing campaign to attract
new customers and lets past customers know about new promotions the company is having.
With just a click of a button, this ecommerce website can create a link, a post, or upload a
picture and have it shown to all the business‘ ―fans‖ that appreciate the company and want to
know more about it immediately. Within seconds, the business‘ fans can ―like‖ the post,
have all their friends see it, and be informed of the promotion. Attracting new clients with
social media Thanks to social media, it has never been easier to attract a new client base and
show them commercials. An existing ―fan‖ or ―follower‖ of your Ecommerce page can
―share‖ or ―retweet‖ whatever you post and have it displayed to all their ―fans‖ and
―followers.‖ More likely than not, a user‘s ―fans‖ or ―followers‖ fall into the same
demographics and have similar interests as this customer. This means there‘s a good chance
existing customers can bring in more targeted buyers to the ecommerce webpage. It is
important for ecommerce companies to advertise their social media presence wherever they
can whenever they can. Although half of all consumers expect an ecommerce company to
have a social media page, only 23% of businesses have one. It is common for companies to
include social media links on their website so visitors who may first come to the website can
continue to stay connected for long term retargeting. With social media, it is possible to get a
visitor to become a ―fan‖ or ―follower‖ instantly. Unlike signing up users via e-mail, adding
new users to your social media profile requires no complicated opt-in process and no lengthy
procedures to create a user account. After just one click, a visitor can be connected to your
business for years to come.

Importance of Online marketing

Growth of internet users must be credited for the growth of online marketing. With the advent
of internet technology number of internet user is increasing at the greater extent across the
world. India stands at second place with 560 million internet users in 2019.
(www.internetwoldstats.com)

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Figure 3.1: - Top 20 Countries with highest number of Internet User in 2019
(Source: - Internet World Stats – www. internetworldstats.com/top20.htm)

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Online marketing is becoming increasingly important to small businesses of all types. In the
past, marketing online was something that local bricks-and-mortar businesses could
justifiably ignore. It didn't make sense to waste time and money on online marketing when all
your business was local.

Now with increasing local search and people's new habit of searching on the Internet first, it
matters. Online marketing refers to a set of powerful tools and methodologies used for
promoting products and services through internet. Online marketing includes a wider range of
marketing elements than traditional business marketing due to the extra channels and
marketing mechanisms available on the internet.

Following are few specific contributed to the growth of online marketing –

 Online marketing can deliver several benefits such as:

o Growth in potential
o Reduced expenses
o Elegant communication
o Better control
o Improved customer service
o Competitive advantage

Online marketing is also known as Internet marketing, Web marketing, digital marketing and
search engine marketing (SEM).

 Offline and online work together

If you have a brick-and-mortar store, you know creating an image is key to bringing in
customers. That‘s why online branding is vital. Com Score reports the average American
spends 32 hours online every month. 42% of Americans report watching TV while browsing
the Internet. Having consistent messaging across different mediums reinforces your values
and brand. Offline tactics will often result in larger online results.

 E-commerce is not the future. It‘s the present

Safe to say e-commerce is trending upward more and more each year. The e-commerce has
transformed the way business is done in India. The Indian e-commerce market is expected to
grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. Much growth of the

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industry has been triggered by increasing internet and smart phone penetration. It‘s not too
late to jump onboard the e-commerce train.

 Online marketing is cost-effective with measurable results

In the old days, buying a newspaper ad was one way to reach potential customers, but now,
newspaper circulation is decreasing dramatically. However a full or even half-page ad in a
local paper could still run you thousands of dollars and may not reach your target audience.

Web analytics tools allow you to track meaningful metrics and offer you the opportunity to
make informed business decisions on data and not just assumptions. Based on data, one can
determine the actual ROI of the online campaigns. If these are not meeting expectations then
the data provides with the rationale to terminate the campaign.

 Online business never sleeps

The Internet has no ―business‖ hours. It‘s open 24/7/365. That gives you the ability to
promote, to engage and, most importantly, to sell around the clock. As mentioned above,
traditional media advertising (like newspaper and television) may cast a wide net but is
limited in scope. Online marketing is also a time and money saver in other ways.

The proliferation of web-enabled smart phones has done nothing, but accelerates this
development. It‘s no longer even required that you be at a desk to access the internet.
Whether customers are sitting in traffic, jogging in the park or eating at the dinner table, they
have access to company‘s website and the online advertising.

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The Steady Rise of the Dot Coms in Business

Business wasn't the fastest to embrace change, when it came over a computer screen and
thorough an online modem. Back in the Clinton days of the 1990s, the internet was used by
the public mostly as a means of communicating in chat rooms and most of that was hosted by
America Online. Business began to see a future in e-commerce selling goods and services
online, but that was before Amazon, and eBay was still an outback where (very) small sellers
sold goods that were hard to find elsewhere, and waited for checks and money orders to
arrive by snail mail. This clearly was not the most efficient way to do business, and larger
brick- and- mortar ventures didn't see much use in establishing an online presence. There
wasn't any way to easily take credit card payments online - this was before the heady rise of
PayPal - so why bother? Who even heard of a checkout much less cart for purchases on
computer screen? There were free websites where one might set up a store, but most of the
business was done the old fashioned way, by the customer calling in their credit card number,
or by sending out a check or money order.

The rise of the dot com, though, was just around the bend, and when they came; business
changed forever.

History of Online Marketing

Considering the current volume of internet marketing business, it‘s hard to believe how
young the internet marketplace is. While the timeline of internet marketing has been short,
the cumulative events leading up to where we are now have impacted the entire globe faster
than any marketing revolution in history. In 1994, spending for internet marketing totaled
nearly nothing, but increased to over $300 million in 1995. Now, little more than a decade
later, marketing spending and internet marketing business has exploded to nearly $200 billion
(according to Forrester Research). Today, it‘s hard to believe in having an organization which
doesn‘t have some kind of online presence. When the internet was first introduced in the
early 90s, it wasn‘t considered to be an advertising medium at all. Instead, the internet was
treated as a tool for exchanging emails and digital information, but wasn‘t yet considered
valuable for reaching customers. However, it wasn‘t long before marketing pioneers began to
see the potential for internet marketing business as millions of web surfers logging on each
day to find valuable and relevant information. Within just a few years, informative and
educational marketing, as well as graphically enticing banner ads began to be show up. It

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wasn‘t long before results began to flood in which proved the value of the internet
marketplace to even the most skeptical advertisers.

Most importantly, companies which had been spending huge chunks of their marketing
budget on offline list building, begin to realize that they could accomplish the same thing via
email and for much less. It wasn‘t long before everyone from industry giants such as
Microsoft Corp. to small businesses began to build company sites and spend marketing
dollars to attract qualified traffic. Next, search engine companies like Yahoo! began to create
significant profits from advertising alone. Then came the great internet marketing business
bust around the year of 2000, which marked the beginning of the end for interruptive
marketing such as flashing banner ads. As interactive features were added to web pages,
consumers were given the option of turning off marketing messages at will and they did.

Then entered the age of education based invitational marketing, which crystallized with the
creation of web 2.0 technologies. Suddenly, billions of ―voices‖ began to rise all over the
world, as the internet marketplace became as much a global community as it was an
advertising medium. This led to a relational based marketing approach which has led to one
of the most lucrative opportunities for solo entrepreneurs and small start ups alike to make a
small fortune working from their spare bedroom. Who knows where the internet marketing
revolution will lead us, but one this is for sure: Those who understand the principles upon
which the thriving internet marketplace is built will most likely never want for opportunities
to create internet marketing business success and to earn solid income.

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India E-Commerce Readiness

In the latest couple of years, there has been a quantum growth in the number of internet users
and the awareness towards the World Wide Web has increased in India. The various
opportunities that it presents have been recognized and companies have started making plans
to include internet, e commerce and e-business in their scheme of things. The awareness and
interest in the web related activities have been fueled by some factors, those are –

 Easy Access to the Internet.

 Reduction in the cost of procuring a internet connection.
 Reduction in the cost of Personal Computers.
 Reduction in the cost of web site hosting.
 Availability of tools that support the web site hosting effort.

Thus there has been a rapid jump in the number of internet users in India as well as the
number of portals offering e-commerce facilities has also gone up. The portals have also
launched massive advertising campaigns for their portals invariably spreading awareness
towards the concept and the facilities offered by e-commerce

The e-commerce has transformed the way business is done in India. The Indian e-commerce
market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017.
Much growth of the industry has been triggered by increasing internet and smartphone
penetration. The ongoing digital transformation in the country is expected to increase India‘s
total internet user base to 829 million by 2021 from 560.01 million as of September 2018.
India‘s internet economy is expected to double from US$125 billion as of April 2017 to US$
250 billion by 2020, majorly backed by ecommerce. India‘s E-commerce revenue is expected
to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of
51 per cent, the highest in the world.

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Market Size

Propelled by rising smartphone penetration, the launch of 4G networks and increasing

consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by
2026 from US$ 38.5 billion in 2017 Online retail sales in India are expected to grow by 31
per cent to touch US$ 32.70 billion in 2018, led by Flipkart, Amazon India and Paytm Mall.

During 2018, electronics is currently the biggest contributor to online retail sales in India
with a share of 48 per cent, followed closely by apparel at 29 per cent.

Investments/ Developments

Some of the major developments in the Indian e-commerce sector are as follows:

Flipkart, after getting acquired by Walmart for US$ 16 billion, is expected to launch more
offline retail stores in India to promote private labels in segments such as fashion and
electronics. In September 2018, Flipkart acquired Israel based analytics start-up Upstream
Commerce that will help the firm to price and position its products in an efficient way.

Paytm has launched its bank - Paytm Payment Bank. Paytm bank is India's first bank with
zero charges on online transactions, no minimum balance requirement and free virtual debit
card

As of June 2018, Google is also planning to enter into the E-commerce space by November
2018. India is expected to be its first market.

E-commerce industry in India witnessed 21 private equity and venture capital deals worth
US$ 2.1 billion in 2017 and 40 deals worth US$ 1,129 million in the first half of 2018.

Google and Tata Trust have collaborated for the project ‗Internet Saathi‘ to improve internet
penetration among rural women in India

Government initiatives

Since 2014, the Government of India has announced various initiatives namely, Digital India,
Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective
implementation of such programs will likely support the e-commerce growth in the country.

Some of the major initiatives taken by the government to promote the e-commerce sector in
India are as follows:

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In order to increase the participation of foreign players in the e-commerce field, the Indian
Government hiked the limit of foreign direct investment (FDI) in the E-commerce
marketplace model for up to 100 per cent (in B2B models).

In the Union Budget of 2018-19, government has allocated Rs 8,000 crore (US$ 1.24 billion)
to BharatNet Project, to provide broadband services to 150,000 gram panchayats

As of August 2018, the government is working on the second draft of e-commerce policy,
incorporating inputs from various industry stakeholders.

Achievements

Following are the achievements of the government in the past four years:

 Under the Digital India movement, government launched various initiatives like
Udaan, Umang, Start-up India Portal etc.
o Under the project ‗Internet Saathi‘, the government has influenced over 16
million women in India and reached 166,000 villages
o Udaan, a B2B online trade platform that connect small and medium size
manufacturers and wholesalers with online retailers and also provide them
logistics, payments and technology support, has sellers in over 80 cities of
India and delivers to over 500 cities.
 According to the UN‘s eGovernance index, India has jumped 11 positions to 107 in
2016 from 2018 in 2014.
 The government introduced Bharat Interface for Money (BHIM), a simple mobile
based platform for digital payments.

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Road Ahead

The e-commerce industry been directly impacting the micro, small & medium enterprises
(MSME) in India by providing means of financing, technology and training and has a
favourable cascading effect on other industries as well. The Indian e-commerce industry has
been on an upward growth trajectory and is expected to surpass the US to become the second
largest e-commerce market in the world by 2034. Technology enabled innovations like digital
payments, hyper-local logistics, analytics driven customer engagement and digital
advertisements will likely support the growth in the sector. The growth in e-commerce sector
will also boost employment, increase revenues from export, increase tax collection by ex-
chequers, and provide better products and services to customers in the long-term

Tools of Online marketing:

 Display advertising - Display advertising conveys its advertising message visually

using text, logos, animations, videos, photographs, or other graphics. Display
Advertisers frequently target users with particular traits to increase the ads' effect.
 Web banner advertising - Web banners or banner ads typically are graphical ads
displayed within a web page. Banner ads can use rich media to incorporate video,
audio, animations, buttons, forms, or other interactive elements using Java applets,
 Frame Ad (traditional banner) - Frame ads were the first form of web banners. The
colloquial usage of "banner ads" often refers to traditional frame ads. Website
publishers incorporate frame ads by setting aside a particular space on the web page.
 Pop-ups/pop-under - A pop-up ad is displayed in a new web browser window that
opens above a website visitor's initial browser window. A pop-under ad opens a new
browser window under a website visitor's initial browser window.
 Floating ad - A floating ad, or overlay ad, is a type of rich media advertisement that
appears superimposed over the requested website's content. Floating ads may
disappear or become less obtrusive after a preset time period.
 Expanding ad - An expanding ad is a rich media frame ad that changes dimensions
upon a predefined condition, such as a preset amount of time a visitor spends on a
webpage, the user's click on the ad, or the user's mouse movement over the ad.
Expanding ads allow advertisers to fit more information into a restricted ad space.

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 Interstitial ads - An interstitial ad displays before a user can access requested
content, sometimes while the user is waiting for the content to load. Interstitial ads are
a form of interruption marketing.
 Text ads - A text ad displays text-based hyperlinks. Text-based ads may display
separately from a web page's primary content, or they can be embedded by hyper
linking individual words or phrases to advertiser's websites. Text ads may also be
delivered through email marketing or text message marketing.
 Search Engine Marketing (SEM) - Search Engine Marketing, or SEM, is designed
to increase a website's visibility in search engine results pages (SERPs). Search
engines provide sponsored results and organic (non-sponsored) results based on a web
searcher's query. Search engines often employ visual cues to differentiate sponsored
results from organic results. Search engine marketing includes all of an advertiser's
actions to make a website's listing more prominent for topical keywords.
 Search Engine Optimization (SEO) -Search Engine Optimization, or SEO, attempts
to improve a website's organic search rankings in SERPs by increasing the website
content's relevance to search terms. Search engines regularly update their algorithms
to penalize poor quality sites that try to game their rankings, making optimization a
moving target for advertisers. Many vendors offer SEO services.
 Sponsored search - Sponsored search (also called sponsored links or search ads)
allows advertisers to be included in the sponsored results of a search for selected
keywords. Search ads are often sold via real-time auctions, where advertisers bid on
keywords.
 Social media marketing - Social media marketing is commercial promotion
conducted through social media websites. Many companies promote their products by
posting frequent updates and providing special offers through their social media
profiles.
 Mobile Advertising - Mobile advertising is ad copy delivered through wireless
mobile devices such as smartphones, feature phones, or tablet computers. Mobile
advertising may take the form of static or rich media display ads, SMS (Short
Message Service) or MMS (Multimedia Messaging Service) ads, mobile search ads,
advertising within mobile websites, or ads within mobile applications or games (such
as interstitial ads, ―advert gaming,‖ or application sponsorship).

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  Email Advertising - Email advertising is ad copy comprising an entire email or a
portion of an email message. Email marketing may be unsolicited, in which case the
sender may give the recipient an option to opt-out of future emails, or it may be sent
with the recipient's prior consent (opt-in).

Advantages of Online Marketing

One of the most important advantages is the fast availability of the information. The
clients/users can easily get information, by navigating the internet, about the products that
they wish to purchase, and besides that, they can check the information at anytime of the day.

 It allows the companies to save money, an aspect that is really taken into account by
the companies since the online marketing campaigns don‘t require a large amount of
investment.
 The previous mentioned aspect, gives less importance to the differences between large
and small companies in some way, thus increasing the competition and giving that
way advantages to the customers.
 Presence on the Internet can help the expansion of the company from a local market
to national and international markets at the same time, offering almost infinite
expanding possibilities.
 On the internet everything can be measured, thus it‘s easier for the companies to
know almost instantly if their campaign is working or not, what company or user is
interested in their products, from what cities or countries are they, etc.

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Disadvantages of Online Marketing:

 Slow internet connections can cause difficulties. If the companies build too complex
or too large websites, it will take too long for users to check them or download them
and they will get bored eventually.
 The e-commerce doesn‘t allow the user ―to touch‖ the merchandise before purchasing
it. Because of this, some salesmen are starting to guarantee the possibility of returning
the product. In Germany, where a law that regulates e-commerce and guarantees the
customers the total refund of the money exists since 2000, the electronic commerce is
very popular.
 Other factor is the payment: many users still don‘t trust in the electronic methods of
paying and give up buying online because of this.
 One of the major disadvantages may be the lack of trust of the users because of the
constant virtual promotions that appear to be frauds. This is an aspect that deteriorates
the image and reputation of quality and honest companies.
 Other disadvantage is the cash on delivery system, since it doesn‘t guarantee the
100% purchase of the product. This is also the case of thousands of users that dedicate
themselves to daily mock big companies by ordering on the internet using false
identities.

Although, there are some challenges involved in Internet marketing, it can be safely said that
Internet marketing has led to increased transparency and ease of buying products. The need
of the hour is to counter the challenges so that Internet marketing proves to be truly beneficial
for all.

This project report aims at identifying the importance of integrated marketing communication
followed by the effectiveness of online marketing as a part of IMC strategy and how Xiaomi
recognized Online Marketing. Therefore the objective of the research is to understand the
massive contribution of Online marketing as a part of Integrated Marketing Communication
and to know its splendid efforts towards promotion in practice and also to find out some
challenges in using online advertising as a tool of Integrated Marketing Communication

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4. Research Methodology

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Research Methodology
Research methodology is a way to solve the problem systematicall y. It ma y
be understood as a science of studying how research is done scientificall y. It
consists of different steps that are generall y adopted by a researcher to study
his research problem. It includes research design, data collecting, research
instrument, sampling plan, data anal ysis.

The first step is to formulate a research design. This means planning a

strategy of conducting research. It is a detailed plan of how the goals of
research will be achieved. Research design is exploratory, descriptive and/or
experimental in nature. It is helping the investigator in providing answers to
various kinds of social/economic questions. After collecting and anal ysis of
the data, the researcher has to accomplish the task of drawing inferences.
Onl y through interpretation researcher can expose relations and processes
that underlie his findings and ultimatel y conclusions.

Interpretation refers to the task of drawing inferences from the collected

facts after an anal ytical study. It is a search for broader meaning and research
findings. It is the device through which factors that seem to explain what has
been observed by researcher in the course can be better understood and
provides theoretical conception which serve as a guide for further researches.
It is essential because it will lead towards findings of the study and proper
effective conclusions of the study.

In the present study, researcher has followed Descriptive research.

Descriptive research is usuall y a fact finding approach generalizing a cross -
sectional study of present situation. The major goal of descriptive research is
to describe events, phenomenon and situations on the basis of observation
and other sources.

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Data Type – Secondary Data

The data collection is based on Secondary Data. Secondary data is the data
collected by others in the past and used by others. It may be either being
published or unpublished data. It includes the following:

 Various publications of central, state and local governments.

 Various publications of foreign governments or international bodies.
 Books, magazines, News paper, Technical and Trade Journals
 Reports prepared by research scholars, universit y economists etc.
 Various Online Sites, Online Database and Websites.
 Reports publications of various associations connected with
business and industry, bank, universit y, economists etc.

Tools for Analysis

For the purpose research following tools have been used: -

 Percentage
 Graph
 Tabulation

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5. Case Study
of

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A Case Study of Xiaomi Corporation
Nobody was able to sell 2,112,010 handsets within 24 hours in 2014, that too through the
company‘s online website and create a world record unless but in 2014 Xiaomi did it. Five
seconds? Yes that is what it took Xiaomi to sell out its stock in India, when they went for the
second round of online sale of Mi3 here in Indian market by the last week of July 2014. Prior
to this, it took 39 minutes for stock to finish when it was launched for the first time in Indian
market in July 2014. The Smartphone manufacturer from China has a very novel business
model wherein they manufacture cell phones in batches thereby keeping the inventory costs
on a very low side. The company has really challenged the brick and mortar model and sell
online, thereby cutting down the intermediaries and keeping the costs down for the company.
The company sells smartphones almost on the cost price. The profit margin is very thin, and
the company believes that they will make money by selling accessories and other
complementary things. The problem which ascends now is that how Xiaomi would be able to
adjust to the increased competition from other players like Huawei and ZUK from Lenovo
who have imitated the same model. The second issue which has come to time light is that
would this business model be sustainable over the long period. The third issue is how the
company would react to the decline in the smartphone sales in China which has been one the
main driving forces responsible for company‘s growth.

1600 1473.4 1465.5

1437.2 1404.9
1400 1301.7

1200
1018.7
1000

800 725.3

600 494.5
400 304.7
173.5
200

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 5.1:- Global Smartphone Shipment in Million Units

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Global Smartphone Industry: As per the figure 5.1 the smart phone industry has seen a
large growth from 2009 to 2018. Although the global smartphone shipment has declined to
some extent but still the worldwide smartphone market is heading for growth. Smartphones
shipped in the 2015 touched 1.43 billion units and in the year 2016 it increased to 1.47 billion
units. The worldwide smartphone shipment is expected to touch 1.5 billion by the end of
2019 and on a CAGR of around 7.9% it is expected to reach a whopping 2 billion units in the
year 2019. There would be added pressures for mobile companies to reduce prices in order to
capture markets in emerging economies.

Apple overtook Samsung for the very first time in the worldwide smartphone market for the
2nd quarter of 2015, as the total growth rate of the devices slowed. With a sudden influx in
the sales of IPhones, Apple shares of global smartphone sales increased from 12.2 percent a
year earlier to 14.6 percent during the 2nd quarter of 2015. Sales of IPhones totalled a record
48 million during the 2nd quarter compared to 35 million in the last year in the same quarter.

On the other hand Samsung shares fell from 26.2% during 2nd quarter of 2014 to 21.9% in the
second quarter of 2015. Even though the company managed to sell more smartphone in the
2nd quarter of 2015, 76 million compared to 72 million. Android market share also fell from
83.8 percent a year ago to 82.2 percent during the second quarter of 2015. Androids pain
became Apples gain as the share of IOS surged to 14.6 percent from 12.2 percent a year
earlier. Some of the Key markets in terms of profitability, sales and future growth are United
States, China and India. China is the leading market representing almost 30 percent of all the
smartphone sales.3 Indian market witnessed a growth of around 44 percent in Q2 of 2015 and
is all set to overtake United States market in the years to come. That is the reason why some
executives believe that if a company does good in any of the above markets it doesn‘t need to
expand any further.

 Market in United States: United States is one of the most important and key markets
in the whole world with a total smartphone user base of around 190.3 million. Apple
leads the US market with a total OEM market share of around 44.1 percent android
takes the pole position with a overall market share of around 51.6 percent. Samsung is
right next after Apple with a market share of around 28.1 percent. South Korean
smartphone company LG comes up as a surprise third entry overtaking Motorola with
a market share of around 8.3 percent. Then comes Motorola which once used to
dominate US marketplace with a falling market share of around 4.9 percent and lastly

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 there is HTC with a market share of 3.4 percent. All of the other companies baring
Apple have suffered some sort of decline in their respective market shares. Only
Apple is expanding its wings in terms of market share and off course at the same
replacing Google‘s android.
 Market in China: China is the biggest smartphone markets in the whole world. In
2014 the country consumed around 32.3 percent of the of all smartphone shipments.
As per IDC smartphone shipments would only grow 1.2 percent in year over year in
2015 which would be around 19.7 percent down in 2014. These tremors have already
been felt in Chinese market. As per Gartner a research based firm, sales in China for
the second quarter of 2015 have already fallen by 4 percent. Analysts believe that by
the end of year 2019 the overall market drop is expected to be around 23.1 percent
while some markets like India will continue to grow. Having said all of this, China
will still continue to be a very good market as it‘s the production house for almost all
of the major smartphone manufactures in the world and looking at the population of
the country it would always a say in global smartphone market. As per the reports
from Counterpoint Research Xiaomi holds the pole position in Chinese market with a
market share of around 15.8 percent. Huawei is chasing up very swiftly and giving
tough competition to the likes of Xiaomi with a market share of 15.4 percent. Apple is
maintaining a market share of around 12.2 percent, vivo 8.1 percent and finally
Samsung holding the fifth place with a market share less than 8 percent. It goes to
show how bad Samsung has been hit in the world‘s biggest market. Further it goes to
show the dominance of Chinese companies in China, how competitive the market is
there and how much is the pressure for cost reduction.
 Market in India: There has been a whopping surge of 44 percent in the total number
of smartphone shipments to India. As per the data from IDC 26.5 million
smartphones where shipped in India by the end of the second quarter of 2015 while as
in the same quarter of the earlier year 18.4 million shipments were made. The growth
was confined to smartphones only as the overall mobile phone market shrunk by
around -6 percent in the second quarter of 2015. Analysts believe that this sudden
surge is only because of the e Tail and their ability to penetrate market. Despite
decline Samsung remained the undisputed leader with a market share of around 23
percent thanks to the growing sales of Samsung S6 and the success of low cost phones
(A series). Indian homemade brand Micromax is following up very quickly with a

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 market share of around 17 percent, Intex has a market share of around 11 percent,
lava around 7 percent and Lenovo 6 percent. Xiaomi also claims that they control
around 4.5 percent of the market. IDC also claimed the by the end of 2017 India
would overtake United States to become the second biggest market of smartphones
globally. This all highlights the significance of Indian market for global players in the
years to come.

Xiaomi Technology India posted Rs 2.93 billion net profit in 2018. In 2016-17, it had a net
profit of Rs 1.64 billion. The firm is now the second largest consumer electronics player in
the country behind Samsung.

Samsung Electronics India gets nearly 38 per cent of its sales from appliances and electronics
such as TVs, refrigerators, and washing machines. It posted Rs 555.12 billion in sales in
2016-17.Its revenue from the mobile business stood at Rs 342.61 billion in the year.

While in recent quarters, Xiaomi has launched smart TVs, air purifiers, and fitness bands, it
continues to get over 90 per cent of its revenue from the sale of smart phones.

The Bangalore-headquartered firm‘s phenomenal rise in the country‘s smart phone market in
the past four years is evident from its growth in revenue that is now almost 23 times of what
it was in 2015-16 — the first full year of its operation here.

Revenue stood at Rs 10.46 billion in the year.

The firm depends on a dozen-odd smart phone models for sales growth in India and has
observed similar trends in its volume sales.

In 2015, the first full calendar year of its operations in the country, its market share was 2.5
per cent. By end-2017, it touched 20.9 per cent, according to International Data Corporation.

In the September quarter, its share went up to 27 per cent. It shipped in record number of
devices (12 million) during the quarter. It has become the only handset brand to
pip Samsung in mid-2017, since the Korean company snatched the top spot in 2012 from
Nokia.

According to Manu Kumar Jain, vice-president of Xiaomi Global, who overlooks operations
in India, the firm‘s focused approach with a handful of devices in its armoury helped it
achieve high growth in past years.

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Its revenue from other operations that includes newly ventured consumer financing business
was Rs 1.14 billion, compared to revenue from sale of Xiaomi products at Rs 228.66 billion.

Jain said in a recent interview that Xiaomi will foray into new territories such as electric
cycles and mobility products other than drones that attract stringent regulations in India.

Mobile Market

This widespread Xiaomi fans‘ community is the brand‘s social media warriors that played a
crucial role in its rise to the top in 2018.

The Mi Community – as the company likes to call it – is a group of Mi Fans that does much
more than uploading and circulating a few promotional videos on social media platforms.
Spread across the country, they are one of the most crucial assets that the company banks on.

From spreading updates about the brand and upcoming devices to creating personalised
world-of-mouth goodwill for Xiaomi – these fans have swelled parallels with Xiaomi‘s
fortunes in the country.

From around 10,000 fans in the mid-2014s, when Xiaomi launched its first device in India, it
touched close to 3 million fans by the end of 2018.

Meanwhile, Xiaomi has turned into a giant. By capturing close to 29 per cent of the 142
million units smart phone market in the country in 2018 – it has replaced Samsung at the top
after six years. And, its revenue grew 22-fold to over Rs 23,000 crore in 2017-18 from Rs
1,046 crore in 2015-16.

If it‘s the Mi Fans that immensely helped Xiaomi‘s brand image, it is the firm‘s distribution
strategy, adopted lately, that has further aided its growth in recent quarters. According to
analysts, it solidified its position at the top of the charts in 2018.

From an online-only brand till early 2017, Xiaomi today boasts of significant presence in the
offline retail space. According to IDC, it now stands second only to Samsung, replacing
Vivo, in the offline retail space — thanks to a successful retail partnership programme
launched over a year ago. As its business began to grow and Xiaomi captured the top spot for
the first time in September 2017 quarter, the firm further focused on its ‗preferred partner‘
programme that allows tie-ups with individual retail stores.
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The Preferred Partner Outlets bear Xiaomi branding and are supposed to push its products.
From metropolises like Delhi-NCR and Bangalore to smaller towns with populations of less
than 100000 – the partner stores are a key driver of its sales today.

―Strong product portfolio and aggressive channel strategy helped it gain market share.
Additionally, in 2018, it has expanded its offline reach with an increased focus on its Mi
preferred partners,‖ analysts from Counterpoint Research noted.

To keep the momentum intact, Xiaomi took Nidhant Chaudhury – a channel distribution
professional who has worked in Lava, Airtel and Coca-Cola – on its board as head for
distribution in the late 2017. It appointed regional managers to further bolster growth.

Consequently, revenue from the offline channel has grown to over 20 per cent of its total
sales by end-2018 from less than 5 per cent a year ago. And its shipment touched a record
41.1 million smart phone units in 2018 – more than any brand in the country.

Long-standing market leader in the e-commerce channel, Xiaomi extended its lead in 2018 by
capturing 47.2 per cent of the online smart phone sales.

Since Xiaomi grabbed the crown from Samsung in September 2017, the firm‘s grip over the
market has only tightened, despite the latter flooding the market with new launches. The 10.5
million devices shipped by Xiaomi in October-December 2018 remained higher than the total
10.3 million smart phones shipped by Samsung and Vivo, the second and third largest
players, together.

Analysts say Xiaomi‘s small yet focused portfolio has also helped it gain share. During 2018,
its budget phones like Redmi 5A and Redmi Note 5 (and Pro) emerged as the fastest selling
devices across brands, driving 10 million shipments each.

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Xiaomi’s Competitive Strategy

The outline of Xiaomi‘s competitive strategy is clear. Using Apple as a benchmark, it has
identified its weaknesses and given full play to its strengths, as follows:-

Providing a high-quality, high-function product at a low price - Generally speaking, there is a

contradictory relationship between high quality, high function and low price. To achieve high
quality and high function, a company needs to invest more, so selling for a lower price is
impossible. As mentioned earlier, the main components for Xiaomi‘s products are from
Samsung, Sharp, Sony, LG and others, and the OEM are also the same Taiwanese
companies‘ factories in China (for example, IAC and Hon Hai) used by Apple. But since the
volume of procurement and contract manufacturing is lower than for Apple, the total cost is
higher. Nevertheless, Xiaomi would rather cut profits and set its prices lower than Apple.
After all, high quality and high function are compatible. Also, Xiaomi‘s high-function aspect
is not synonymous with multi-function. Rather, it means eliminating unnecessary functions
and providing the functions that consumers really want. For example, the remote control
function for using Xiaomi‘s smart TV and the electronic ticket function for subway turnstiles
(like SUICA in Japan) are very popular with consumers.

Ensuring benefits from non-hardware elements - Apple earned a large part of its profits from
its hardware, but Xiaomi cannot do that, so it needs to earn profits from software and
services. This is related to Xiaomi‘s nature of specializing in software. For example, some
mobile games developed by Xiaomi became best-sellers and contributed greatly to profit.
Xiaomi is also well-regarded for its good service to users.

Giving full play to the role of SNS - Before launching a smartphone, Xiaomi developed
MiChat, which is similar to Facebook, and attracted many members (Mi fans). Blogs written
by Xiaomi‘s management team, including Lei Jun, also played a major role in expanding the
number of Mi fans. Making full use of SNS created an environment that supported the launch
of Xiaomi‘s smartphone. Moreover, even after launching its smartphone, Xiaomi keeps track
of users‘ reviews, communicates with consumers in real-time, and continues improving its
product.

Online sales as a latecomer in the smartphone market compared to the pioneers, Xiaomi
faced several disadvantages. From the perspective of management resources (human,
technology, capital, information and brand), Xiaomi lacks all. Therefore, Xiaomi does not

Page | 64
usually use any traditional marketing methods such as stores, advertising or TV commercials.
It concentrated its resources in online sales, thus achieving significant cost savings. Today, 70
percent of Xiaomi‘s products are sold online and the remaining 30 percent through China
Unicom, China Mobile and other sales partners.

Xiaomi's arch rival Samsung leads the offline smartphone sales, while it is the second largest
smartphone maker in the overall Indian market. Seeing the movement of its competitor the
country‘s largest smartphone maker Xiaomi plans to significantly expand its offline retail
footprint this year to expand sales. Xiaomi is growing in offline market and it has grown 40
time in offline sales in last two years when it first forayed into this channel in India and
offline now contributes to over 30% of smartphone sales. Xiaomi visions its entire business
model shaping up in India across hardware, internet services and retail business. Xiaomi
hopes to further build on all three dimensions, and bring in stronger product offerings and
evaluate newer categories across hardware and internet services.

Page | 65
6. Data Analysis and Interpretations

Page | 66
 Xiaomi market share in India

Table 6.1 - Xiaomi market share in India

Companies Market Share
Xiaomi 28.90%
Samsung 22.40%
Vivo 10%
Others 38.70%
Total 100%

28.90%

38.70% Xiaomi
Samsung
Vivo
Others

22.40%
10%

Figure 6.1: - Market Share of Mobile Companies In 2018

(Source – https://economictimes.indiatimes.com/tech/hardware/xiaomi -
leads-india-smartphone-market-in-2018-samsung-
second/articleshow/67955037.cms )

Interpretation

The 28.90% market share by Xiaomi is highest mar ket share of mobile
companies in 2018 f ollowed by 22.40% of Samsung followed by 10% of Vivo
and 38.7% of other mobile manufacturing companies . This data represent that
the focus on online market to reach a large number of people and
manufacturing mobile at low cost has helped Xiaomi to reach at number 1
spot in market share.

Page | 67
Devices used for collecting news & information

Table 6.2 - Devices used for collecting news & information

Device User
Computer 17%
Mobile 68%
Tablet 3%
Other 15%
Total 100%

80%

70% 68%

60%

50%

40%

30%

20% 17%
15%

10%
3%
0%
Computer Mobile Tablet Others

Figure 6.2:- Devices used for collecting news & information

Interpretation

68% of people use mobile to search information and news while 17% use
computer, 3% people use tablet and 15% people use other devices to collect
information. T hus we can say that mobile is the most fastest and convenient
way to achieve information about anything. Thus for most people Mobile is
the first source for collection of information.

Page | 68
Internet Users in India on the basis of their age

Table 6.3 – Internet Users in India on the basis of their age

Age of Person 2016 2020
Less Than 35 74% 67%
35 Year And Above 26% 33%
Total 100% 100%

120%

100%
Less than 35 Year

80% 35 Year And Above

74% 67%
60%

40%

20% 26% 33%

0%
2016 2020

Figure 6.3:- Internet Users in India on the basis of their age

(Source: - https://www.statista.com/statistics/751005/india -share-of-
internet-users-by-age-group/)

Interpretation

From the above data we can clearl y see that people of age of 35 and above
are using internet and their percentage has gone from 26% to 33%. By
anal ysing above data we can clearl y say that even people who are above 35
year of age are graduall y shifting towards using smartphones as the
technology is becoming more users friendl y. It also denotes that technology
is becoming is easil y available fo r everyone to learn and use.

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Xiaomi market performance

Figure 6.4:- Xiaomi market performance

(Source - https://www.business-standard.com/article/technology/xiaomi-india-revenue-
rises-175-in-fy18-mi-posts-net-profit-of-2-93-bn-118102301482_1.html)

Interpretation

The revenue jump of 175% and constant increasing market share denote that
Xiaomi is utilising its assets in right manner. It also gives signal that the
strategies used by the companies are liked by the market and consumers.

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Customer Satisfaction Rating in Indian Smart phone Industry in 2018

Table 6.4 - Customer Satisfaction Rating in Indian Smart phone Industry in 2018

Rank Companies

1 Oppo

2 Vivo

3 Xiaomi

4 Samsung

(Source:-
https://www.businesswire.com/news/home/20181004005449/en/Oppo -Vivo-
Xiaomi-Top-Customer-Satisfaction-India)

Interpretation

3 r d position of Xiaomi on consumer satisfaction index denotes that consumer

is satisfied with product and they are able to derive value for their money. It
denotes the lead of the product over other smart phone manufacturer. It also
shows that there is room of improvement even for Xiaomi as Oppo and Vivo
are companies which focuses on traditional and local market captures.

Page | 71
Does Consumer rely on one m edium to gather knowledge about any
brand?

Table 6.5 – Rely on one medium to gather knowledge about any brand
Frequency Percentage
No 82 41
Maybe/Somewhat 47 23.5
Yes 71 35.5
Total 200 100

35.50% 41% No
Maybe
Yes

23.50%

Figure 6.5: - Rely on one medium to gather knowledge about any brand
(Source- http://www.dypatil.edu/schools/management/wp -
content/uploads/2015/05/Study -Of-The-Effectiveness-Of-Online-
Marketing-On-Integrated-Marketing-Communication-Amruta-Pawar.pdf)

Interpretation

It denotes more than 54% of people may try to consider more than just one
medium for collecting information while 41% people will gather knowledge
onl y from one medium therefore any company or organisation must not rel y
onl y on one medium. It also suggests that staying on many medium helps to
gain a customer by building trust.

Page | 72
Sources of awareness of various brands

Table 6.6 - Sources of awareness of various brands

Frequency Percent
Print Ad 22 11
Television Commercial 53 26.5
In Store Promotion 37 18.5
Outdoor Media 18 9
Online Media 70 35
Total 200 100

11%

35% Print Ads

Television Ads
26.50% In Store Promotion
Outdoor Media
Online Media

9%
18.50%

Figure 6.6: - Sources of awareness of various brands

(Source- http://www.dypatil.edu/schools/management/wp -
content/uploads/2015/05/Study -Of-The-Effectiveness-Of-Online-
Marketing-On-Integrated-Marketing-Communication-Amruta-Pawar.pdf)

Interpretation

The above data shows that 35% people get aware about product from online
followed by 26.5% from Television Ads, 18.5 % from In store Promotion, 11%
from Print Ads and 9% from Outdoor Media. It denotes Online Medium is one
of largest sources of awareness of various brands and every brand should
start focusing on online market.

Page | 73
7. Findings

Page | 74
Objective 1: - To study and analyse the marketing strategy of Xiaomi Corporation Limited.

Findings - Xiaomi is using Apple as a benchmark to manufacture mobile and has became
largest seller of smartphones in India. In addition to that they are generating their maximum
revenue through online marketing. Xiaomi also uses online marketing as they are cost saving
and addresses a large audience but in addition to online marketing Xiaomi is constantly
opening stores in the Indian market to maintain its lead and to attract a whole new set of
customer who are afraid of online shopping. Therefore Xiaomi is utilising the concept of
Online marketing with Integrated Marketing Communication to expand its market and
provide a better product and service to customer.

Objective 2: - To identify the impact of online marketing strategy of Xiaomi Corporation

Limited.

Findings – Current Xiaomi 70 percent of products are sold online and the remaining 30
percent through offline vendors, shops and showrooms. Online Marketing Strategy has
helped Xiaomi to reach top position by dethroning Samsung, the largest manufacturer of
smartphones in the world. Thus we can say Xiaomi Corporation Limited has a positive
impact due to online marketing.

Objective 3: - To study the growth of Xiaomi Corporation Limited due to modern technique
of Integrated Marketing Communication.

Finding – Xiaomi has captured highest part of market with the help of online marketing but it
is constantly evolving and now Xiaomi has started focusing on offline market where it has
now became the second largest smartphone maker in the overall Indian market. It has helped
Xiaomi to reach 3rd position on consumer satisfaction index. It has also helped in revenue
jump of 175%. Thus we can clearly say that Xiaomi Corporation limited is a live example of
growth in market due to Integrated Marketing Communication.

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Objective 4: - To identify and analyse the limitations of online marketing in Xiaomi
Corporation Limited.

Finding: - Limitations of online marketing in Xiaomi Corporation Limited are following:-

 Old and rural customers are confused about the product.

 High Competition and constantly changing technology.
 Many users still don‘t trust in the electronic methods of paying and give up
buying online.
 Fake ordering using cash on delivery system.

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8. Conclusion

Page | 77
Conclusion:-

The study concludes that consumers rel y upon mo re than one medium in order
to enhance their brand related knowledge. It means th at they use the
combination of various sources for making final purchase decisi on. Along
with the traditional sources, they heavily rel y on modern marketing tool i.e.
online advertising.

Consumers do require detailed information about t he brand so as to evaluate

its strengths & weaknesses; this ample amount of inform ation then saves their
time by allowing them to make the purchase decision quickl y

Online marketing is a game changing tool in today‘s marketing world but it

can be used to capture more area if one uses Online marketing with
Integrated Marketing Communication . With the increased number
Smartphone‘s and availabilit y of internet across nation has led to expansion
of Online Market reach in India. Online Market has wide reach and its cost
benefit has led customer to shift towards digital platform. Online Market has
reduced the global barrier of culture and distance.

The study of Xiaomi Corporation s hows that even brick and mortar stores are
changing their way of doing business. The project report also shows that how
Xiaomi Corporation is making high profit from the third-party applications
that are pre-installed on the devices as one of its major source of revenue
through marketing practices.

The major benefits of onlin e marketing are its capability of interaction

between consumers and advertisers followed by availabilit y of w ide range of
information & ease of shopping. These benefits make online mark eting
superior than traditional marketing.

But at the same time consumers are susceptible about the user -safet y side of
internet. They feel that online marketing is unsafe as it may lead to increase
in frauds & privacy issue.

Page | 78
9. Limitations & Recommendations

Page | 79
Limitations : -

As per m y research the l imitations of the project are following:

 Research is conducted on secondary data.

 Secondary data can be biased.
 The topic is currently in function therefore constant change is taking
place.
 As the topic is new, less number of studies has been conducted on it
therefore various aspect of market has not been yet considered.
 Due to time constraint research is conducted within a limited scope.

Recommendations : -

I would like to recommend follow ing points to the Xiaomi Corporation: -

 The company should allow the customer to choose whether they want
ad or not, if no they shoul d charge minimal cost to maintain their
income.
 India‘s market is second largest market in case of online consumption
of data keeping that in mind Xiaomi should start developing its offline
market at a fast speed so that it can cover rural market of India before
it‘s too late.

Page | 80
10. Bibliography

Page | 81
Books And Online Journals

o Kotler, P., & Keller, K. L. (2006). Marketing Management. Pearson Education

o Pawar, A. V. (2014, November). Study of the Effectiveness of Online
Marketing on Integrated Marketing Communication. Retrieved from
http://www.dypatil.edu/schools/management/wp-
content/uploads/2015/05/Study-Of-The-Effectiveness-Of-Online-Marketing-
On-Integrated-Marketing-Communication-Amruta-Pawar.pdf
o Belch, G. E., & Belch, M. A. Advertising and Promotion – An Integrated
Marketing Communications Perspective (6th ed.). Tata McGraw-Hill.
o Xiaomi leads India smartphone market in 2018, Samsung second. (2019,
February). Retrieved from
https://economictimes.indiatimes.com/tech/hardware/xiaomi-leads-india-
smartphone-market-in-2018-samsung-second/articleshow/67955037.cms
o Distribution of internet users in India in 2016 and 2020, by age group. (2019).
Retrieved from https://www.statista.com/statistics/751005/india-share-of-
internet-users-by-age-group
o Diamond, S. Web Marketing for Small Businesses: 7 Steps to Explosive
Business Growth. Sourcebooks
o Social media warriors add volume to Xiaomi's ringtone in India. (2019,
February 21). Retrieved from https://www.business-
standard.com/article/companies/social-media-warriors-add-volume-to-xiaomi-
s-ringtone-in-india-119022100020_1.html
o Wojnicki, A. C. (2006). Word-Of-Mouth and Word-Of-Web: Talking About
Products, Talking About Me (Vol. 33).
o Chaffey, D., Chadwick, F. E., & Johnston, K. (2008). Internet Marketing:
Strategy, Implementation and Practice (4th ed.). Prentice Hall.

Websites

o www.proquest.com
o www.emarald.com
o www.wikipedia.com
o www.techopedia.com
o www.webopedia.com
o www.blogsi2k2.com
o www.soravjain.com
o www.businesstoday.com
o www.multimediamarketing.com
o www.google.com
o www.ibef.org

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